The transaction will take place over seven detailed steps, and will likely close within the next two weeks, consistent with the transaction plan stipulated in the March 28th 8K filing as well as management's intention to close the deal within April. Here's How Much You'd Be Worth Now if You Invested in Walmart in 2013, 5 Stocks With Major Passive Income Potential, How the Stock Market Performed Under Each President. All relevant risks are not covered in this article. Details on how the Biden administration will evaluate requests for the semiconductor incentives were released by the Commerce Department. Discovery ("WBD"). Discovery. I wrote this article myself, and it expresses my own opinions. Echoing our thoughts from the previous coverage, we believe the fast-approaching WBD spinoff will be a promising play for participating AT&T investors. Discovery's Stock, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, Billionaire Investor Bill Ackman Is Raking In $97 Million In Annual Dividend Income From These 2 Stocks, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 3 No-Brainer Stocks to Buy With $50 Right Now, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Motley Fool Issues Rare All In Buy Alert, Copyright, Trademark and Patent Information. NEW YORK and DALLAS, April 8, 2022 Today Discovery, Inc. and AT&T Inc. * ( NYSE:T) announced that they have closed their transaction to combine the While most AT&T shareholders are income-focused, the WBD transaction could make an attractive one-time trade to capitalize on promising near-term upside potential resulting from a valuation re-rate event. 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. Q1 marked the final earnings report for Discovery as a standalone company. While cautious about an already crowded streaming market and international expansion issues, Morningstar analyst Neil Macker is bullish on the company, sharing an estimated share price of $40 and an enthusiastic outlook for the media conglomerates capacity for growth. Is this happening to you frequently? In 2000, internet service provider America Online bought Time-Warner, Inc. to form AOL Time Warner, but when the dot-com bubble burst, that partnership dissolved quickly. With a loss of 6% in 2022, Paramount Global (PARA) stands out as the winner, so to speak, among this bunch. Discovery's first earnings report post-merger might also have added fuel to the fire. However, I admit I have reservations regarding the companys debt load and financial prowess. are met. Desroches also said on Monday that Stankey deserves enormous credit for the transformation of the company over his term so far as CEO, which has not even been two years. The companies are forecasting a free cash flow conversion ratio of 60 percent, which looks very healthy. Shares of Warner Bros. Discovery is now a buy, hold or sell. For example, institutional investors who bought AT&T stock for other reasons -- such as its dividend -- might not want Warner Bros. Based on 14 ratings, nine analysts had WBD stock as a moderate buy, five rated it as a hold, and only one appraiser had the company as a sell. Discovery Communications and its three share classes will no longer exist as the company, unlike AT&T, will fully be merged into Warner Bros. totaling approximately $42 billion received from a combination of bridge loans, term loan credit agreements, note issuances, and revolving credit agreements obtained or completed through commitments with JPMorgan Chase Bank, Goldman Sachs Bank, Goldman Sachs Lending Partners LLC, and "certain other financial institutions". I am a graduate of the U.S Army Ranger school and a former member of the 1st Ranger Battalion and The Old Guard (U.S Army Honor Guard.) Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Subscribe for full access to The Hollywood Reporter. Consequently, there could be significant overseas subscribers added. Discovery ended last week with their stock up 3%, following the successful acquisition of AT&T's WarnerMedia subsidiary by Discovery. Discovery, Inc. This increased its subscriber numbers to 76.8 million. Copyright 2023 Market Realist. Discovery stock was up 5% in midday trading on the stock market today, near 32.50. One of the analysts rates WBD as a sell. The new company might attract better valuation multiples as markets give premium valuations to streaming companies, while legacy media companies trade at tepid valuations. That compares to $140 million in net income and EPS of $0.21 in the comparable quarter. Financial Insight in Your Inbox: Sign Up for GBR's Daily Newsletter, Maximize your savings with these 3 expert tips. Discovery planned to keep Discovery+ as a standalone streaming platform, as the company weighs how to make more of its content available in a single place. We will not launch any new markets for the time being. I have no business relationship with any company whose stock is mentioned in this article. Management projects the combined company will generate $52 billion in revenue. 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 2025, while expenses are expected to accelerate. Of that, $15 billion will be generated by direct-to-consumer services. 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). If you bought shares of the S&P 500 ETF SPY as 2022 dawned, you are down around 10%. Visit a quote page and your recently viewed tickers will be displayed here. All Rights Reserved. Another massive streaming giant round the corner? This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). Prior to WBDs quarterly report announcement, Barrons reported that analysts at Goldman Sachs reinstated a buy rating and price target of $22 on Warner Bros. Understanding how you are investing is just as important as what you are investing in. Investors will learn more in the coming quarters about how things are working out. I am not receiving compensation for it (other than from Seeking Alpha). Discovery currently has 700 million shares outstanding, while 1.7 billion new shares will come to market as part of the transaction. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Making the world smarter, happier, and richer. I also have concerns regarding the toll cord cutting may take on the companys future results. In early Monday trading, the shares of the The blended average of the combined WBD valuation range with and without synergies is about $102.2 billion to $153.8 billion. The new management is trying hard to turn around the ship. By Russ Burlingame Please. Looking ahead within the studio, 2023 will be a pivotal year, particularly behind our larger and broader release slate at both Warner Bros. Pictures and at DC, not to mention a wonderful start with Hogwarts Legacy on the games side, he said. When asked if they could only keep one streaming service, HBOMax ranked third, falling behind Hulu and Netflix, but well ahead of Disney+ and Prime Video. The new company will be able to compete in the streaming industry. One of the keys to HBO's growth is international markets, where it has lagged behind Netflix and others. Discovery, will start These issued Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock dividend exchange ratio previously discussed. Under WBDWV Trading, AT&T shareholders will be able to sell their right to WBD shares distributed to them as a result of their AT&T share ownership as of the record date through the temporary Nasdaq ticker "WBDWV" beginning April 4th. The forward P/E for the company is 8.68x, and the 5-year PEG is 0.43x. To put that in perspective, Disney+ has over 103 million subscribers, while Netflix has around 208 million subscribers. Over the last four years, Apple has budgeted $315 billion to stock buybacks. The transformation weve undergone over the past 18 months while delivering outstanding operational results has brought us to this point. Although I endeavor to provide accurate data, there is a possibility that I inadvertently relay inaccurate or outdated information. Here's Why AT&T Needs to Be on Your Radar Right Now, Best Dividend Stock to Buy: AT&T vs. Ford vs. Intel, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, Billionaire Investor Bill Ackman Is Raking In $97 Million In Annual Dividend Income From These 2 Stocks, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 3 No-Brainer Stocks to Buy With $50 Right Now, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. There was an unknown error. David Nadelle is a freelance editor and writer based in Ottawa, Canada. You can click on the 'unsubscribe' link in the email at anytime. Management also emphasized that the company will take a circumspect approach to content spend. There is no doubt that WBD will possess a formidable content portfolio. Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments. Discovery stock after the merger has been unpleasant, management can still make The thinking is that this could lead to a surge in subs when the two services are combined. SPX, Wall Street will soon take note of the news and analysts might revise their ratings. What's been going on and is now the time to sell out of the stock? It's worth noting that these forecasts were before Discoverys merger announcement. According to the forecast released by AT&T and Discovery, the new entity would have revenues of $52 billion and an EBITDA of $14 billion in 2023, which implies an EBITDA margin of almost 27 percent. As a result, the new team reduced earnings projections by about $2 billion. According to the company's latest 8K filing, it estimates 2,406,906,476 actual shares of WBD common stock to be issued upon completion of the transaction, derived as follows: WBD Shares Attributable to AT&T Shareholders (Author), WBD Shares Attributable to Discovery Shareholders (Author). 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