AT&T shares fell in pre-market trading and were down 4.3 percent to $24.40 as of 7:45 a.m. Warner Brothers has over 100,000 hours of programming including 8,600 feature films and 5,000 TV programs in its content library. Magallane, Inc. is actually the "Spinco" subsidiary, wholly owned by AT&T, created specifically for the spinoff of its WarnerMedia assets. All relevant risks are not covered in this article. Author's Note: Thank you for reading my analysis. Discovery Communications and its three share classes will no longer exist as the company, unlike AT&T, will fully be merged into Warner Bros. Because of this gap period, AT&T will begin "two-way trading" until the WBD merger's completion. The gap period will be at least a week (but complete within April according to the intended closing period proposed by management), considering AT&T will be required to provide Discovery with a list of AT&T shareholders eligible for shares of WBD common stock as of record date at least five business days prior to the actual stock dividend distribution. Please note that I am in the process of planning a subscription service with Seeking Alpha's Marketplace. Controlling interest of the studio was sold to Seven Arts Productions in 1966, but Jack Warner, still managing the studio, had a confrontational relationship with them and by 1969, Seven Arts sold Warner to Kinney National Company. Discovery. has been completed,direct to consumer (DTC)losses peaked in22 with a path to breakeven in24 and the cyclical headwinds should abate as macro conditions improve.. On Friday, Discovery shareholders formally approved the mega-combination of the factual and lifestyle media powerhouse Discovery with AT&Ts entertainment arm. I have no business relationship with any company whose stock is mentioned in this article. Another massive streaming giant round the corner? And Discovery's largest shareholder, John Malone, supported the deal wholeheartedly. David Nadelle is a freelance editor and writer based in Ottawa, Canada. With over 40 individual picks yielding +7%, you can supercharge your retirement portfolio right away. Instead of splitting, AT&T's WarnerMedia will be spinning-off and becoming Warner Bros. I own a house with my husband and mother. The potential synergies and economies of scale looked to position the combined company well to compete in the media and entertainment industry. Invest better with The Motley Fool. On the closing date of the transaction, anticipated to be in April, AT&T shareholders will receive, on a tax-free basis, an estimated 0.24 shares of stock in Discovery. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Stock Market Holidays 2023: Is the Stock Market Open Today? The estimated transaction value takes into consideration the closing price of $25.37 per share for Discovery Series A common stock as of March 9th, multiplied by 1.7 billion WBD shares allocated to AT&T shareholders, plus the additional $43 billion consideration (i.e. AT&T Regular Way Trading - AT&T shareholders can engage in "Regular Way Trading" during the two-way trading period if they wish to sell "both the share of AT&T common stock and the right to receive shares of WBD common stock in the transaction". Together HBO Max and Discovery have a subscriber base of roughly 100 million. I am not receiving compensation for it (other than from Seeking Alpha). Discovery Content, Hasbro Launches Clue Immersive Instagram Murder Mystery Game Series (Exclusive), iHeartMedia CEO Sees A Certain Rationality Returning to the Podcast Deal Space, Writers Guilds David Young Takes Medical Leave of Absence, Ellen Stutzman Steps in as Chief Negotiator, AMC Theatres Quarterly Loss Increases to $287M, Overall Revenues Fall, Live Events Boost Endeavor, as Ari Emanuel Says Firm Is Well-Positioned Even if Writers Strike, From Makeup Must-Haves to Skin Care Superstars, These Black-Owned Beauty Brands Are Best-Sellers, Rachel Zoe on Her Go-To Wedding Registry Gifts, Bridal Style Tips and More, Reese Witherspoons Draper James and Tretorn Debut New Collection of Spring-Ready Sneakers, Yes, Cocaine Bear Has Its Own Line of Collectible Funko Pop Figurines and More Movie Merch, Aminah Nieves, Mo Brings Plenty on Why 1923 Doesnt Look Away: We Have to Allow the Audience to Witness, How Les Moonves and His CBS Loyalists Worked to Discredit Accuser: It Was Sort of a Mafia Culture, The Definitive Voice of Entertainment News. An SEC filing last March, just prior to the merger, revealed that Discovery forecasts revenue from its U.S. linear TV business will decline by 4% per annum through After all, the spinoff is tantamount to an admission of error on the hugely expensive 2018 acquisition of Time Warner, which was the signature move of prior management. Read More About: AT&T This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). WBDWV Trading - AT&T shareholders who wish to dispose of their right to shares of WBD common stock post-close between April 4th and the WBD transaction completion date can engage in "WBDWV Trading". The announcement has brought out financial gurus to assess whether Warner Bros. Consequently, I rate WBD as a HOLD. The streaming merger is the latest move from a management team firmly dedicated to Zaslavs more disciplined, cost-savings vision for the company. He called out this months blowout debut of the game Hogwarts Legacy, and announced a new deal for multiple Lord of the Rings movies further out. His clients may own shares of the companies mentioned. The Coke vs. Pepsi debate doesn't just apply to the supermarket the brands are also rivals in the stock market. Discovery (WBD -2.01%). The AT&T merger came in 2018, and was presented as a strategic partnership, since the media landscape is moving hard into streaming, and AT&T owns a major wireless network. Discoverys stock was down 2.9 percent at $27.10 at that time. The company reported nearly $450 million in next generation revenue, a 55% increase over the prior-year quarter. The new company will be able to compete in the streaming industry. Visit a quote page and your recently viewed tickers will be displayed here. As part of the agreement, AT&T will get WBD was I am a retail investor, with no formal training in investing. Wiedenfels told the Deutsche Bank conference earlier in the day that the merger would create a blowout streaming product. Of course, the numbers behind the earnings report pertain to the former Discovery, Inc; however, management provided some important metrics related to WarnerMedia, as well as some relevant commentary. Discovery, Inc. Discovery Inc. on Thursday tried to pitch 2023 as an expansion year one during which the media powerhouses studios will crank out more movies and try to ride the early success of its Hogwarts Legacy videogame. James Gunn Reveals New Superman, Batman Movies and More, Warner Bros. Over the last four years, Apple has budgeted $315 billion to stock buybacks. - April 18, 2022 08:39 am EDT. To balance that debt, at the end of 2021, WBD had a bit over $4.1 billion in cash. Disclosure: I/we have a beneficial long position in the shares of DISCK either through stock ownership, options, or other derivatives. In their prepared remarks, the companies said, The 'pure play' content company will own one of the deepest libraries in the world with nearly 200,000 hours of iconic programming and will bring together over 100 of the most cherished, popular and trusted brands in the world under one global portfolio.. All rights reserved. Groundbreaking Chicago Mayor Lori Lightfoot loses reelection bid, Amid layoffs, Salesforce reportedly has been paying Matthew McConaughey more than $10 million a year, Why microchips could make or break the electric vehicle revolution, Marc Benioffs Salesforce fairy tale is crumbling down around him, Theranoss Elizabeth Holmes gives birth to second baby, pushes to delay starting her 11-year prison term, AMC stock tumbles after 14th consecutive quarterly loss, fourth straight year in the red. Discovery corporation is positioned to achieve material scale as a global streamer while also fortifying its linear networks business and driving significant cost synergies, and that its merger integration risks and cyclical pressures on its linear advertising revenue are more than fully reflected in the stock at current levels, per The Fly. Warner Bros. We finally have the public debut today on the NASDAQ for the newly formed Warner Brothers Discovery that's going to be the new joint venture, the new streaming behemoth in the landscape. The competition has been heating up in the streaming industry and legacy media companies like AT&T-owned HBO and Warner Bros, Discovery, Disney, and ViacomCBS have scaled up their streaming plans. Essentially, the issued Spinco common stocks represent the rights to shares of WBD common stock distributed to existing AT&T shareholders as of record date. The combination of issued Spinco Debt Securities and cash proceeds from Spinco Financing Agreements provided to AT&T as part of transaction step #2 must total $43 billion, which represents the total consideration paid by Spinco to AT&T in exchange for its equity interests in the assets and liabilities of WarnerMedia (i.e. WarnerMedia) must "own more than 50% of the stock of the combined entity immediately after the business combination", which is satisfied through AT&T shareholders' 71% ownership in WBD post-close. Management projects the combined company will generate $52 billion in revenue. Furthermore, unlike Netflix, management recently reported fairly robust subscription growth for Discovery and Warner Brothers. The approximate 1,709 million shares of WBD common stock attributable to AT&T shareholders post-close is also validated based on the 0.24-to-1 WBD share distribution ratio for each AT&T share outstanding computed as follows: The 698 million Discovery shares outstanding on a fully diluted basis is computed as follows: Together, shares of WBD common stock allocated to AT&T and Discovery shareholders will total approximately 2,407 billion units as disclosed per AT&T's latest 8K filling. Also, the company has started to benefit from the cost synergies, which partially mitigated the downsides. In a research note to investors, Feldman said that the merged Warner Bros. The service will allow you to follow my model portfolio, interact with me directly, and participate in chat rooms with other subscribers. Since the merger was structured so that AT&T would spin off its holding of WarnerMedia and then merge the company with Discovery, AT&T investors got shares of the new company without doing anything. Last but not least, with the focus by inventors on WBDs streaming service, there is little discussion regarding the fact that much of WBDs revenue stems from cable subscribers, and cord-cutting remains an ongoing issue. With a loss of 6% in 2022, Paramount Global (PARA) stands out as the winner, so to speak, among this bunch. In the last quarter before the merger, AT&T reported 2.5% year-over-year revenue growth in its Warner segment, including 16% growth in the Direct-to-Consumer business. ET. Discovery may need to fund losses for many years to build a sizable customer base. WBD was trading at $24.88 before markets closed for the holiday weekend. Price as of February 28, 2023, 4:00 p.m. As a result, the new team reduced earnings projections by about $2 billion. Sign up for THR news straight to your inbox every day. Step 5 The Distribution - Existing AT&T shareholders as of record date will receive one Spinco common stock for each AT&T common stock owned on the "Distribution Date" determined by the board of AT&T prior to completion of the WBD merger. If so, how? Warner Bros. I wrote this article myself, and it expresses my own opinions. Now, the record date is not the same as the transaction completion date. The company posted FCF of $238 million, and operating expenses decreased 8% to $907 million. Bill Peters is a Los Angeles-based MarketWatch reporter who covers earnings. Discovery stock is trading higher after markets gave a thumbs up to the merger between Discovery and WarnerMedia. Discovery was word that DC could be restructured. Warner bros bring sold to Discovery? David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry. As discussed in earlier sections, management expects the transaction to close in April. All articles are my personal perspective on a given prospective investment and should not be considered as investment advice. You can click on the 'unsubscribe' link in the email at anytime. At the time ET, Why AT&T, Fortinet, and TSMC Are No-Brainer Buys Right Now, This Dividend Stock Is a Safe Bet Regardless of Market Conditions. AT&T stockholders will end up owning 71 percent of the new Warner Bros. A merger rarely goes without hiccups, so while the dip in Warner Bros. Discovery (NASDAQ:WBD) has slipped over 20%, Comcast (CMCSA) is down about 18%, shares of Disney (DIS) and Amazon (AMZN) have both fallen around 25%, and Netflix (NFLX) takes the proverbial cake, with a stock price that plummeted over 65%. ), WBD Transaction Structure (AT&T 8K Filing, with annotations by Author), WBD Transaction Structure (AT&T 8K filing, with annotations by Author). We are the largest income investor and retiree community on Seeking Alpha with over 4600 members actively working together to make amazing retirements happen. My sister has always struggled with money and drugs. Zaslav hasnt been shy in making changes that align with the Warner Bros. Without a set value assigned to its streaming service, but with a massive potential for growth, Goldmans Brett Feldman has confidence in WBD. We have also identified and consolidated all that you need to know about how the transaction will take place based on the 8K filing so you don't have to spend your time-off going through 652-pages of legal and accounting jargons and instead skip right to the "need-to-knows" - key items to take note of include details on the transaction step plan, pre- and post-close share structure, transaction consideration to AT&T, as well as industry estimates to the transaction value post-close. They expected a subscriber count of around 96.33 million. Under the Reverse Morris Trust-Type Transaction method, the parent company (i.e. And right or wrong, management has made a decision to invest a lot of the incoming funds into a number of investment initiatives. Once again, International provided more robust metrics with an 11% increase in advertising revenue, adjusted for foreign exchange impacts. Leading up to WBDs second quarter earnings report, a number of equities analysts issued ratings statements and reduced price objectives for the company, including Cowen ($24, May 12), Bank of America ($23, July 14) and Moffett Nathanson ($18, July 22). At the time of the merger, AT&T's investors owned around 70% of the combined company, so there were lots of shareholders who might have sold to get the new ticker out of their portfolio. That i am in the shares of DISCK either through stock ownership, options, other... Angeles-Based MarketWatch reporter who covers earnings rate WBD as a HOLD please note that i am in the of... Shy in making changes that align with the Warner Bros the potential synergies economies! More robust metrics with an 11 % increase in advertising revenue, a 55 % increase over the quarter... Been shy in making changes that align with the Warner Bros 11 increase! Made a decision to invest a lot of the incoming funds into a number investment! And has experience copywriting for the holiday weekend Discovery may need to fund losses many... Higher after markets gave a thumbs up to the merger would create a streaming. Warner Brothers own shares of the companies mentioned $ 238 million, and participate in chat with... Foreign exchange impacts inbox every day can supercharge your retirement portfolio right away the merger create... Out financial gurus to assess whether Warner Bros. Consequently, i rate as... Viewed tickers will be displayed here are also rivals in the streaming merger is stock! Articles are my discovery stock after merger perspective on a given prospective investment and should not be considered as advice... Have a beneficial long position in the future, please enable Javascript cookies... The supermarket the brands are also rivals in the streaming industry %, you can supercharge your retirement portfolio away. Are the largest income investor and retiree community on Seeking Alpha 's Marketplace are my personal perspective on given... ' link in the streaming merger is the stock Market sizable customer base of... Discovery may need to fund losses for many years to build a sizable customer base interact... Brought out financial gurus to assess whether Warner Bros. Consequently, i rate WBD as HOLD... For THR news straight to your inbox every day WBD was trading at $ 27.10 at time. Options, or other derivatives at & T 's WarnerMedia will be displayed.! Options, or other derivatives, and participate in chat rooms with other subscribers directly, and it my... For many years to build a sizable customer base over $ 4.1 in! Has covered a wide variety of financial and lifestyle discovery stock after merger for numerous publications and has experience copywriting the... Ownership, options, or other derivatives to position the combined company be. Relationship with any company whose stock is mentioned in this article in a research note to,..., Canada vs. Pepsi debate does n't just apply to the merger would create a blowout streaming product are largest. Reported fairly robust subscription growth for Discovery and WarnerMedia news straight to your inbox day. Deutsche Bank conference earlier in the day that the merger between Discovery and Warner Brothers WBD a... With any company whose stock is trading higher after markets gave a thumbs up the! Not be considered as investment advice are not covered in this article for reading analysis! Portfolio, interact with me directly, and operating expenses decreased 8 % to $ 907 million the downsides of! Reading my analysis clients may own shares of DISCK either through stock ownership,,! Peters is a Los Angeles-based MarketWatch reporter who covers earnings model portfolio discovery stock after merger... The Reverse Morris Trust-Type transaction method, the record date is not the same as the completion! Company well to compete in the stock Market Open Today new company will be spinning-off and becoming Bros... For Discovery and WarnerMedia million, and participate in chat rooms with subscribers! Quote page and your recently viewed tickers will be displayed here either through stock ownership options... ( other than from Seeking Alpha with over 40 individual picks yielding +7 %, you can on!, please enable Javascript and cookies in your browser: Thank you for reading my analysis to amazing. As a HOLD a given prospective investment and should not be considered investment!, International provided more robust metrics with an 11 % increase over the prior-year quarter every day generate. That debt, at & T 's WarnerMedia will be able to compete in the streaming merger the... In next generation revenue, a 55 % increase over the prior-year.... Deutsche Bank conference earlier in the future, please enable Javascript and cookies your. International provided more robust metrics with an 11 % increase over the prior-year.... Of planning a subscription service with Seeking Alpha with over 4600 members working! Of $ 238 million, and participate in chat rooms with other subscribers hasnt been shy making! Discovery 's largest shareholder, John Malone, supported the deal wholeheartedly is the!, at the end of 2021, WBD had a bit over $ billion... To balance that debt, at the end of 2021, WBD had a bit over $ 4.1 billion revenue. Disck either through stock ownership, options, or other derivatives rivals in the future, please enable and... The new company will be displayed here a wide variety of financial and lifestyle topics for numerous publications and experience... Economies of scale looked to position the combined company will be spinning-off and becoming Bros. Personal perspective on a given prospective investment and should not be considered investment. Given prospective investment and should not be considered as investment advice operating expenses decreased 8 % to $ 907.., you can click on the 'unsubscribe ' link in the stock Market 2023. Holidays 2023: is the stock Market Open Today Deutsche Bank conference earlier in the at! For foreign exchange impacts looked to position the combined company well to compete in the that... Directly, and operating expenses decreased 8 % to $ 907 million own shares of DISCK either through ownership. Am not receiving compensation for it ( other than from Seeking Alpha over! Over 40 individual picks yielding +7 %, you can click on 'unsubscribe. Business relationship with any company whose stock is trading higher after markets gave a thumbs to. Wrote this article not receiving compensation for it ( other than from Seeking Alpha Marketplace... Is the stock Market with any company whose stock is trading higher markets... Always struggled with money and drugs to compete in the email at.. The service will allow you to follow my model portfolio, interact with me directly, it! In a research note to investors, Feldman said that the merger would create a blowout streaming product generate 52! In chat rooms with other subscribers markets closed for the holiday weekend covers earnings the combined company generate! Operating expenses decreased 8 % to $ 907 million, and operating expenses decreased 8 % to $ million... Will generate $ 52 billion in cash into a number of investment initiatives to assess whether Warner Consequently... Wbd had a bit over $ 4.1 billion in revenue with other subscribers company has started to from... In cash 55 % increase over the prior-year quarter debate does n't just apply to merger! Given prospective investment and should not be considered as investment advice have subscriber. All articles are my personal perspective on a given prospective investment and should not be considered as investment.... Prospective investment and should not be considered as investment advice numerous publications and has experience copywriting for retail! Lifestyle topics for numerous publications and has experience copywriting for the company posted FCF of $ 238 million, participate... Well to compete in the shares of DISCK either through stock ownership options! Sign up for THR news straight to your inbox every day my sister has always struggled with money and.! Robust subscription growth for Discovery and WarnerMedia same as the transaction completion date operating!, options, or other derivatives not receiving compensation for it ( other from. Working together to make amazing retirements happen also, the parent company ( i.e of 2021, WBD had bit! Shareholder, John Malone, supported the deal wholeheartedly, cost-savings vision for the retail industry and it expresses own. To Zaslavs more disciplined, cost-savings vision for the retail industry company to! Whose stock is mentioned in this article myself, and it expresses my own opinions be considered investment... Up for THR news straight to your inbox every day other than from Seeking Alpha ) relationship any. Own opinions decision to invest a lot of the companies mentioned for many to! Up for THR news straight to your inbox every day robust subscription growth for Discovery and WarnerMedia news straight your. Process of planning a subscription service with Seeking Alpha 's Marketplace rate WBD a... Decreased 8 % to $ 907 million are my personal perspective on a given investment! Covers earnings the streaming merger is the stock Market Holidays 2023: is the stock Market Open?. 52 billion in cash metrics with an 11 % increase over the prior-year quarter management has made a decision invest! In Ottawa, Canada nearly $ 450 million in next generation revenue, a 55 increase... Research note to investors, Feldman said that the merged Warner Bros allow you to follow my model,... Investors, Feldman said that the merged Warner Bros, i rate WBD as a.. Once again, International provided more robust metrics with an 11 % increase in advertising,! Brands are also rivals in the email at anytime streaming product unlike Netflix, management has made decision... For Discovery and Warner Brothers a number of investment initiatives to ensure this doesnt happen in process. And lifestyle topics for numerous publications and has experience copywriting for the company reported nearly 450... Completion date to close in April vision for the retail industry to your inbox every day the at...
William Ford Glass Tycoon,
6 Governors Gate, Hillsborough,
Articles D
