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AT&T and ViacomCBS Exploring CW Network Sale

AT&T’s (T) WarnerMedia and ViacomCBS (VIAC) are exploring the sale of a large stake or the entire CW Network. Citing people familiar with the matter, the Wall Street Journal (WSJ) reports that Nexstar Media (NXST)has shown interest in the unit that the two companies jointly own. T shares fell 0.38% to close at $26.11 on January 6.

AT&T is a holding company specializing in telecommunication,s media, and technology services. It offers wireless services and also produces and distributes feature films, television, and gaming content. AT&T’s earnings report for Q4 2021 is scheduled for January 26, 2022.

CW Network Sale 

The WSJ reports that Nexstar could end up taking a controlling stake in CW Network. In return, CBS and WarnerMedia would end up with minority stakes. People close to the talks say an agreement could be reached soon, though there is also a likelihood of the deal falling apart. 

CW Network is best known for content that targets teens and young adults. The acquisition should allow Nexstar to strengthen its content aspirations. It has already made a big investment in national cable news service NewsNation. 

A move to offload a portion, or the entire CW Network, comes at a time when AT&T is also pushing to spin off its Warner Media business to Discovery (DISCA). The deal is expected to close in the spring. 

Stock Rating

Last month, Daiwa Securities analyst Jonathan Kees reiterated a Hold rating on AT&T stock with a $26 price target, implying that the stock is fully priced at current levels. According to the analyst, the wireless carrier faces many challenges despite its valuation being near a three-year low.

AT&T‘s dividends have been increasing since 2009, and its dividend yield currently stands at 8.1%. While the company has the highest level of debt compared to its peers, it remains well-positioned to benefit from the divestment of Warner Media.

Consensus among analysts is a Moderate Buy based on 5 Buys, 5 Holds, and 1 Sell. The average AT&T price target of $29.30 implies 12.22% upside potential to current levels.

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