A strange revelation emerged for entertainment giant Warner Bros. Discovery (WBD) today, as we discovered that the offer that Warner just rebuffed from Paramount Skydance (PSKY) was not the first of its kind. It was, reports note, the third. And that gave investors a little extra reason to cheer, as shares gained modestly in the closing minutes of Wednesday’s trading.
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So while it may have seemed like Paramount’s offer—the offer that kicked off a flurry of speculation about who else might want in on the action—came out of nowhere, it was actually part of a pattern, reports noted. There was one bid that came in at $24 per share, though it was 80% cash and 20% stock.
And with that bid, Warner launched a “review of strategic alternatives,” including selling now, selling part of the company now, or staying out of the whole sales process altogether, which remains a possibility as Warner has a plan in mind to split up that will render the value of the business likely quite a bit higher before all is said and done.
Is Netflix In or Out?
Meanwhile, in a move that left some scratching their heads, Netflix (NFLX) made some noises in regard to potentially buying Warner, or at least some part of Warner. This is a deal that would likely go well for Netflix. Buying Warner would not only give Netflix a glut of content it could immediately add to its own listings, but also a huge streaming audience already paying for HBO Max, as well as a set of studio lots that Netflix has already been building on the opposite coast at Fort Monmouth.
Netflix did note that it has “no interest” in acquiring linear networks. And that makes sense; Netflix has no need of them apart from, potentially, the content contained within. But the studio and content library, now, that is a whole different matter. Note also that Netflix said nothing about the studio and streaming arms of Warner. So Netflix may be making a play for Warner before too much longer has happened, and potentially kicking off a bidding war.
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 11 Holds assigned in the past three months, as indicated by the graphic below. After a 177.35% rally in its share price over the past year, the average WBD price target of $19.23 per share implies 6.42% downside risk.
