With more and more viewers departing cable in favor of streaming, streaming deals shake up the landscape every time they’re signed. That’s what happened earlier today with Roku (NASDAQ:ROKU) and Warner Bros. Discovery (NASDAQ:WBD). A new deal sent both stocks upward, though Roku got much more gain from the deal than Warner did.
The new deal created an entirely new FAST (Free Ad-supported Streaming Television) channel on Roku and also on Tubi. Under the deal, Warner content—including such figures as “Westworld” and “Finding Magic Mike”—will arrive at no charge and be wholly supported by ads on these platforms. This is in keeping with a remark from David Zaslav, current Warner Bros. Discovery chief, that made clear FAST operations were coming.
FAST is an increasing draw for cable cutters, explained Roku’s vice president of programming Rob Holmes. So it’s little surprise that content providers like Warner Bros. Discovery would start bringing programming to FAST platforms like Roku and Tubi. Given that a recent study found that over half of television streamers in Canada do their streaming on FAST platforms, that’s not out of line. Roku also needs some support for its plan to build its own televisions.
While Roku clearly came out ahead of Warner Bros. Discovery as a result of this deal, Roku lags according to Wall Street. Analyst consensus calls Roku stock a Hold but Warner stock a Moderate Buy. Interestingly, Roku also has downside risk of 0.33%, thanks to its average price target of $57.83. Yet, Warner Bros. Discovery has an upside potential of 17.86% due to its average price target of $17.32 per share.
