Discovery had done a nice job of consolidating the unscripted content portion of the media universe, but it was still a relative niche player in a world with emerging mega-bundles. Apple, one of the largest tech giants in the world, designs and manufactures cell phones, laptops, and smart devices. There will likely be a short gap period between the record date and the ultimate transaction closing date with WBD listed to Nasdaq to ensure all closing conditions (e.g. AT&T stockholders will end up owning 71 percent of the new Warner Bros. Now consider that Amazons (AMZN) cash and marketable securities totaled $96.1 billion at the end of 2021, and that Apples cash and investments totaled $205.6 billion at the end of 1Q22. I will add that an investment in this company at this stage requires a bit of faith in managements ability to execute, as well as analysts aptitude in forecasting growth rates for Warner Bros. In 1989, Warner merged with Time Inc., publishers of Time and Life magazines, who were almost immediately forced to buy Warner Bros. after a hostile takeover attempt by Paramount (who, funny enough, wanted Time, not Warner). 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. If content is king, an argument can be made that WBD takes the crown. And it will be available in 220 countries and 50 languages. Shares of AT&T ( T) - Get Free Report are higher on Monday, at last check about 8% up, after the company completed its merger with Discovery on Friday. Note that the WBD merger is a "Reverse Morris Trust-Type Transaction", which occurs on a tax-free basis for existing AT&T and Discovery shareholders. However, Discovery is an expert in international content, with a presence across 220 markets, and expertise adapting its unscripted content to many other languages. 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. have both fallen around 25%, and Netflix (. ) A merger rarely goes without hiccups, so while the dip in Warner Bros. The company posted a 5% growth in U.S. advertising and an 11% increase in distribution revenue due to Discovery+. 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. Magallane, Inc. is actually the "Spinco" subsidiary, wholly owned by AT&T, created specifically for the spinoff of its WarnerMedia assets. Discovery was word that DC could be restructured. WBD, There is currently no definitive answer to when the WBD merger will close or what its post-close value will be. 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. Still, the company the result of a merger last year between AT&Ts WarnerMedia and Discovery will have to get through a weaker advertising backdrop that weighed on fourth-quarter results, as well as a subscriber count that came in below expectations. Members of High Dividend Opportunities get exclusive ideas and guidance to navigate any climate. This increased its subscriber numbers to 76.8 million. Because of this gap period, AT&T will begin "two-way trading" until the WBD merger's completion. Investors had high hopes for Warner Bros. The streaming space is crowded, and Warner Bros. Consequently, I rate WBD as a HOLD. I wrote this article myself, and it expresses my own opinions. Discovery had reported 20 million subs as of Sept. 30 of 2021. These offers do not represent all deposit accounts available. In addition to announcing April 5th as the record date for AT&T shareholders eligible for the special stock dividend pertaining to the WarnerMedia spinoff, the telecom giant also submitted a 652-page filing to the SEC, covering every "nitty-gritty" detail from pro-forma historical WarnerMedia statement of operations that were not previously available, all the way down to key terms of the merger agreement with Discovery (Nasdaq: DISCK, DISCA, DISCB) to create Warner Bros. Several studies indicate consumers rate the companys streaming service as at or near the top in several categories. 111). Invest better with The Motley Fool. The stock could be a long-term winner based on its the strong growth potential in the streaming industry. Discovery, will start As of Aug. 5, MarketBeat lists Warner Bros. takes the proverbial cake, with a stock price that plummeted over 65%. 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 The Spinco Financing Agreements allude to debt 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". The Motley Fool recommends Discovery (C shares). Invest better with The Motley Fool. However, those that looked to streaming companies to build a portfolio are in much worse shape. to the transaction, we have better refined our estimates. 2023 The Hollywood Reporter, LLC. Could AT&T Stock Beat the Market in 2023? ET. Wall Street has been discussing AT&Ts decision on a spinoff as the structure of the deal, which it unveiled on Feb. 1. Shares of Warner Bros. So, in order to really do a split, you are going to have to create enough demand for that 1.7 billion for an AT&T shareholder base that is dividend-focused retail investors and income-focused funds, which represent 60 to 70 percent of the telecom conglomerates total investors and likely would not participate in this structure, the AT&T CFO explained. Price as of February 28, 2023, 4:00 p.m. Warner Bros. The Wall Street Journal this month reported that Warner Bros. Shop Pay is an innovative payment solution developed by Shopify. The thinly traded shares (ticker: DISCB) that are 95% owned by media mogul and Discovery board member John Malone traded Tuesday at $68.88, down $1.02. 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. With a loss of 6% in 2022, Paramount Global (PARA) stands out as the winner, so to speak, among this bunch. Echoing our thoughts from the previous coverage, we believe the fast-approaching WBD spinoff will be a promising play for participating AT&T investors. The company also pointed to a weak macroeconomic environment and challenging dynamics in the streaming industry. Last week, AT&T confirmed April 5th at market close as the record date for the stock dividend related to the WarnerMedia spinoff. Unsurprisingly, some of the remaining shareholders -- those who held onto the shares after the initial post-merger drop off -- might have been upset by these adverse developments and joined the selling rally. All Rights Reserved. The future of WarnerMedia was for a long time undecided until AT&T eventually divulged the details of a massive merger with Discovery. share conversion ratios, estimated WBD shares outstanding post-close, recent Discovery and AT&T closing share price, peer comps, etc.) Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments. Step 6 The Reclassification - Prior to the completion of the WBD merger, Discovery will "amend and restate the "Discovery charter" to outline the Discovery-to-WBD share conversion structure for each of its Series A, B and C common stocks and Series A-1 and C-1 preferred stocks as discussed in the "WarnerMedia Spinoff Share Structure" section above. Visit a quote page and your recently viewed tickers will be displayed here. To balance that debt, at the end of 2021, WBD had a bit over $4.1 billion in cash. My primary focus is on dividend bearing stocks. Meanwhile, investors will receive a lower dividend while they wait for the company to execute and catch up. Discovery stock is a bargain buy Warner Bros. The consensus 12-month price target of the five analysts rating the stock is $37.25. In our previous coverage, we had determined the potential upside potential in WBD attributable to AT&T shareholders to be about 77% considering (i) AT&T's share price of about $24 at the time (late March), (ii) management's projected 2024 WBD revenues and EBITDA, as well as (iii) comparable peer valuation multiples: WBD Upside Potential Attributable to AT&T Shareholders (Author). -0.30% ), WBD Transaction Structure (AT&T 8K Filing, with annotations by Author), WBD Transaction Structure (AT&T 8K filing, with annotations by Author). Warner Bros. To make the world smarter, happier, and richer. These offers do not represent all available deposit, investment, loan or credit products. That's good news for a company that's heavily leveraged, after Discovery went deep into debt to afford to $43 billion price tag for Warners. are met. 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%. I am a retired law enforcement officer. AT&Ts WarnerMedia unit and Discovery Inc said on Friday that the two firms have completed the merger. Discovery, with Discovery shareholders holding the rest. But upon consummation of the deal, all Discovery shares will merge into the new company with one vote per share. In addition, Discovery didn't have a dividend prior to this announcement, while AT&T was a former Dividend Aristocrat that will cut its dividend in half in the wake of the deal. I also have concerns regarding the toll cord cutting may take on the companys future results. Q1 marked the final earnings report for Discovery as a standalone company. Discovery (NASDAQ: WBD) when the stock went public last April. Since its creation (from the merger of Discovery and WarnerMedia) earlier this year, the stock has gone nowhere but down. 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. 2022 was mired by a combination of company-specific, merger-related headwinds along with cyclical and secular pressures, they continued. Based on a combination of discounted cash flow analyses and EBITDA multiple-based valuation analyses performed by the respective transaction advisors on each of Discovery (equity value range: $30.6 billion to $43.1 billion) and WarnerMedia (equity value range: $55.9 billion to $94.3 billion without synergies; $87.3 billion to $127.1 billion with synergies), WBD has potential to reach a valuation range of $86.5 billion to $137.4 billon without synergies, and $117.9 billion to $170.2 billion with synergies post-close. With the megamerger of Discovery and AT&Ts WarnerMedia closing late on Friday, creating new media and entertainment giant Warner Bros. For Discovery as a HOLD price as of February 28, 2023, 4:00 p.m. Warner Bros fallen. Warner Bros be a long-term winner based on its the strong growth potential in streaming! In 220 countries and 50 languages answer to when the stock could be a long-term winner based its... 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