discovery stock after merger

At the time Visit a quote page and your recently viewed tickers will be displayed here. Since the merger was structured so that AT&T would spin off its holding of WarnerMedia and then merge the company with Discovery, AT&T investors got shares of the new company without doing anything. WBD projects $20 billion in content spend in 2022. Billy Duberstein owns shares of AT&T, Discovery (C shares), and Netflix. The stock could be a long-term winner based on its the strong growth potential in the streaming industry. Discovery had reported 20 million subs as of Sept. 30 of 2021. Make this your go-to guide to understanding stock charts. Discovery stock is a bargain buy Warner Bros. With the steady hand of Zaslav now in command of more world-class media assets he can now deploy internationally, Discovery has gone from a small unscripted player to a scaled global behemoth across scripted, unscripted, and news content. Year-to-date, Warner Bros. One of the keys to HBO's growth is international markets, where it has lagged behind Netflix and others. The distributed Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock dividend exchange ratio previously discussed. Prior to WBDs quarterly report announcement, Barrons reported that analysts at Goldman Sachs reinstated a buy rating and price target of $22 on Warner Bros. Groundbreaking Chicago Mayor Lori Lightfoot loses reelection bid, Amid layoffs, Salesforce reportedly has been paying Matthew McConaughey more than $10 million a year, Why microchips could make or break the electric vehicle revolution, Marc Benioffs Salesforce fairy tale is crumbling down around him, Theranoss Elizabeth Holmes gives birth to second baby, pushes to delay starting her 11-year prison term, AMC stock tumbles after 14th consecutive quarterly loss, fourth straight year in the red. Overall, the company revised adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to between $9 billion and $9.5 billion for 2022, down from the $10 billion forecast before the merger. All Rights Reserved. Desroches also said on Monday that Stankey deserves enormous credit for the transformation of the company over his term so far as CEO, which has not even been two years. As part of the agreement, AT&T will get Discovery ("WBD"). AT&T is also still behind competitors in 5G deployment, and is up against stiff competition in the fiber broadband space. One is a relatively high rate of churn. The forecast is for adjusted EBITDA of $14 billion with an FCF conversion rate of 60% in 2023. Zaslav, in the companys earnings release, said that major restructuring decisions were behind us. However, Warner Bros. The streaming merger is the latest move from a management team firmly dedicated to Zaslavs more disciplined, cost-savings vision for the company. 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. A number of HBO exclusive movies have quietly disappeared from the platform. What the Smartest Investors Know About Warner Bros. 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. The potential synergies and economies of scale looked to position the combined company well to compete in the media and entertainment industry. Investors will learn more in the coming quarters about how things are working out. The Hollywood Reporter is a part of Penske Media Corporation. Discovery have tumbled 45.2% over the past 12 months. In our last coverage on the upcoming WBD transaction and its implications for AT&T post-close, we had provided a detailed estimate on WBD's upside potential attributable to AT&T shareholders post-close. My primary focus is on dividend bearing stocks. The companies are also forecasting annual cost synergies of $3 billion. Discovery stock after the merger has been unpleasant, management can still make adjustments to deliver value to shareholders over the long run. This is according to TipRanks, which provides a 65% success rate and an average 17.6% annual return for my articles. The Motley Fool recommends Discovery (C shares). We have also identified and consolidated all that you need to know about how the transaction will take place based on the 8K filing so you don't have to spend your time-off going through 652-pages of legal and accounting jargons and instead skip right to the "need-to-knows" - key items to take note of include details on the transaction step plan, pre- and post-close share structure, transaction consideration to AT&T, as well as industry estimates to the transaction value post-close. to create Warner Bros. Revenue came in at $11 billion, compared with $3.19 billion in the prior-year quarter. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. 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. However, a significant share of WBDs revenue is derived from the companys cable business, and it is no secret that cable is experiencing a secular decline. The spinoff and dividend cut is probably the right long-term move for AT&T, as it will offload some $43 billion in debt to the new WarnerMedia company. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). While streaming would bring long-term growth, it also means more investment into content creation. If you have an ad-blocker enabled you may be blocked from proceeding. Investors should also consider that producing streaming content is costly, and WBD assumed a great deal of debt when it took on Warner Brothers. Discovery, will start AT&T and Discovery sound optimistic about the new company's outlook. 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. The company posted a 5% growth in U.S. advertising and an 11% increase in distribution revenue due to Discovery+. The merger also benefited AT&T's share prices, although not quite as much; most of the money from the acquisition is going to go into clearing out some of the telecom giant's debt in the coming months. The transaction will take place over seven detailed steps, and will likely close within the next two weeks, consistent with the transaction plan stipulated in the March 28th 8K filing as well as management's intention to close the deal within April. Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments. 2023 The Hollywood Reporter, LLC. For a time, it seemed like Warner was a big dog, buying up companies like DC Comics, Six Flags, and Lorimar. In early Monday trading, the shares of the Essentially, the estimated transaction value considers the closing price of $25.37 per share for Discovery Series A common stock as of March 9th as a proxy for the WBD IPO price (recall that one Discovery Series A common stock is exchangeable for one WBD common stock post-close as discussed in earlier sections). Discovery ended last week with their stock up 3%, following the successful acquisition of AT&T's WarnerMedia subsidiary by Discovery. It wasn't a surprise to see Discovery shares generally acting better than AT&T's on the deal as the near- and medium-term outlook appears brighter for Discovery's shareholders than AT&T's. In the merger presentation, AT&T said it will pay out about 40% to 43% of free cash flow as its dividend, while giving a $20 billion-plus estimate for free cash flow All AT&T shareholders on record as of April 5th at market close will be eligible for 0.24 WBD shares for each share of AT&T share owned. Discovery stock. Discovery in a merge that equates to a $43 billion transaction. Instead of splitting, AT&T's WarnerMedia will be spinning-off and becoming Warner Bros. All relevant risks are not covered in this article. Erik Khalitov/iStock Unreleased via Getty Images. have both fallen around 25%, and Netflix (. ) The blended average of the combined WBD valuation range with and without synergies is about $102.2 billion to $153.8 billion. Discovery, which has no dividend. Members of High Dividend Opportunities get exclusive ideas and guidance to navigate any climate. Could AT&T Stock Beat the Market in 2023? net asset value under U.S. federal income tax purposes $33 billion + $10 billion additional amount) transferred into the Spinco in transaction step #1: totaling $33 billion, which represents the estimated fair value of AT&T's equity interest in total WarnerMedia assets and liabilities to be transferred to Spinco as discussed in transaction step #2. Invest better with The Motley Fool. While it was a nice niche player before, I think the growth possibilities for the new company are much bigger than they would have been for Discovery alone. Ex-Distribution Trading will take place under the temporary NYSE ticker "T WD" during the two-way trading period. to the transaction, we have better refined our estimates. Discovery+, added two million subscribers in the quarter, boosting its subscriber count to 24 million. While I still own a small token amount of AT&T, my allocation to Discovery is much larger, and Discovery looks to have more intriguing post-deal upside. Discovery. However, most of the analysts rate the stock as a hold or some equivalent. Discovery stock after the merger has been unpleasant, management can still make The gap period will be at least a week (but complete within April according to the intended closing period proposed by management), considering AT&T will be required to provide Discovery with a list of AT&T shareholders eligible for shares of WBD common stock as of record date at least five business days prior to the actual stock dividend distribution. With the 5G transition in full swing, the company can't afford to be distracted with the streaming media wars, paying down debt, and maintaining the dividend all at once. Meanwhile, investors will receive a lower dividend while they wait for the company to execute and catch up. The strongest case for WBD is the massive supply of content associated with WarnerMedia. Discovery (WBD -2.01%). Discovery posted fourth-quarter 2022 earnings on Feb. 23, with revenue of $11.01 billion decreasing A total of 26.26 million student loan borrowers have applied or were deemed automatically eligible for relief under President Joe Biden's student loan forgiveness program, and there are 16.48 million Students who received a Pell Grant to help pay for college could be eligible for double the standard amount of student loan forgiveness under President Biden's student loan forgiveness plan. After the next few quarters, investors will have a better sense of how things are playing out and whether the stock is one to hold onto. Discovery stock is trading higher after markets gave a thumbs up to the merger between Discovery and WarnerMedia. The consensus 12-month price target of the five analysts rating the stock is $37.25. Q1 operating profit and cash flow for WarnerMedia were clearly below my expectations. While cautious about an already crowded streaming market and international expansion issues, Morningstar analyst Neil Macker is bullish on the company, sharing an estimated share price of $40 and an enthusiastic outlook for the media conglomerates capacity for growth. Sign up for our daily newsletter for the latest financial news and trending topics. There is currently no definitive answer to when the WBD merger will close or what its post-close value will be. Its an app that people can use just like a regular wallet to store their card details and information. Offers may be subject to change without notice. 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 Networks jumped 7% to $1.93 billion while International Networks registered 25% growth to $1.23 billion. Also see: Succession creator says upcoming fourth season will be its last. Cost basis and return based on previous market day close. The new entity will focus on streaming services. Disclosure: I/we have a beneficial long position in the shares of AMZN AAPL either through stock ownership, options, or other derivatives. 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. The Motley Fool has a disclosure policy. Discovery (NASDAQ: WBD) when the stock went public last April. Discovery, Inc. It may be counterintuitive for me to be bullish on Discovery but not as much on AT&T, but remember, AT&T is a $225 billion market cap behemoth that's splitting up, while Discovery is a mere $17 billion company merging into something bigger. But if I take a step back here and just look at, call it, the past 15 months for WarnerMedia sort of as a carve out-group, we're looking at more than $40 billion of revenue and really virtually no free cash flow. You can click on the 'unsubscribe' link in the email at anytime. 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. Lawrence Nga has no position in any of the stocks mentioned. Considering the record date is April 5th, we believe the transaction could close within a week's time at the earliest, considering AT&T's requirement to provide Discovery with a list of AT&T shareholders eligible for shares of WBD common stock at least five business days prior to the actual stock dividend distribution (i.e. Bill Peters is a Los Angeles-based MarketWatch reporter who covers earnings. Also, the company has started to benefit from the cost synergies, which partially mitigated the downsides. That Discovery has generally executed well through the 2018 Scripps Networks Interactive acquisition, and Discovery CEO David Zaslav will become CEO of the new combined company, which is likely a telling move. I am a also value / buy and hold investor. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. I have no business relationship with any company whose stock is mentioned in this article. Please note that I am in the process of planning a subscription service with Seeking Alpha's Marketplace. I seek a degree of safety in my investments by. And given that Q1 performance and previously unplanned projects in sight, I currently estimate the WarnerMedia part of our profit baseline for 2022 will be around $500 million lower than what I had anticipated. And as I'm looking under the hood here again, CNN+ is just one example, and I don't want to go through sort of a list of specific examples, but there's a lot of chunky investments that are lacking what I would view as a solid analytical, financial foundation and meeting the ROI hurdles that I would like to see for major investments. To make the world smarter, happier, and richer. James Gunn Reveals New Superman, Batman Movies and More, Warner Bros. Zaslav hasnt been shy in making changes that align with the Warner Bros. If you have taken a look at AT&T's latest 8K filling dated March 28th, you would notice that the filing registrant is "Magallanes, Inc.". Discovery's share price when the new company began trading earlier this year. 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. Hogwarts Legacy launched on Feb. 10. According to the estimates compiled by CNN Business, Discovery has a median target price of $41.5, which is a premium of 16.4 percent over its May 14 closing prices. The new company might attract better valuation multiples as markets give premium valuations to streaming companies, while legacy media companies trade at tepid valuations. 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". Discovery (DISCA) stock is trading sharply higher on May 17 after it announced a definitive agreement to combine with AT&Ts media assets. The Motley Fool has a disclosure policy. WarnerMedias operating income declined 35% year-over-year. WBDs forward P/E and 5-year PEG ratio, if accurate, indicate the stock is trading at a bargain. (I update this score on at least a quarterly basis for readers.). Discovery, with Discovery shareholders holding the rest. Discovery Stock Rises Following Merger Completion, Ricou Browning, Star of Creature From the Black Lagoon, Dies at 93, It's Always Sunny in Philadelphia Teases Gritty Cameo, Pokemon Cosplay Celebrates Misty's Anime Comeback, Burger King Adding Spicy Chicken Fries to Menu, Jon Hamm Reportedly Engaged to Mad Men Co-Star Anna Osceola, Josh Gad Takes Over as Jungle Cruise Skipper at Disneyland, AMC Theatres to Launch New Lines of Popcorn at Walmart. David Nadelle is a freelance editor and writer based in Ottawa, Canada. Upon completion of the transaction, AT&T shareholders will, together, own 71% equity interest in WBD, with Discovery shareholders owning the remainder 29%. Analyst recommendations, in-depth research, Investing resources, and richer rating the stock public! 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