While we know that entertainment giant Warner Bros. Discovery (WBD) is planning to split itself into two components coming up, we also know that split may not happen before someone buys Warner outright. Whether the new buyer goes ahead with the split, or keeps everything whole, is immaterial. Warner—or rather, the part of Warner that will be Discovery Global—is going ahead with an advertising sales upfront event regardless. This did not sit well with investors, who sent Warner shares down fractionally in the closing minutes of Monday’s trading.
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An upfront, for those not familiar, is basically where a network or similar media property shows off what will be coming to the platform in the weeks and months ahead, to try and drum up interest in buying advertising slots in those programs. The event is set to take place May 13 at Madison Square Garden, which sounds like Warner is planning for the one-big-event style of upfront as opposed to the multiple smaller ones Paramount Skydance (PSKY) was using back when it was just Paramount.
Ryan Gould, president of United States ad sales, noted “While the structure of our company is transforming, our shared commitment to creating meaningful connections between audiences and brands remains stronger than ever. We’re looking forward to showcasing how the world-class portfolios of both Discovery Global and Warner Bros. can connect advertisers with high-impact consumer engagement and drive unmatched value.”
Offers Inbound
Meanwhile, reports suggest that Paramount is about to go from “only horse in the race” to “one of three.” Apparently both Comcast (CMCSA) and Netflix (NFLX) are putting together offers to buy Warner, having seen where the floor is from Paramount’s recent offer.
Both of the companies have reached out to Warner in a bid to “…collect information needed to make a possible offer for the company.” If these bids actually come to fruition, it will turn a one-horse race into a full-on bidding war, which is likely just what Warner CEO David Zaslav was hoping for. While any of the three could put together a serious bid, each has certain benefits and drawbacks involved in pursuing Warner. Only time will tell, meanwhile, just how far this goes.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on six Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 177.92% rally in its share price over the past year, the average WBD price target of $19.14 per share implies 10.08% downside risk.
