Warner Bros Discovery rises after BofA says possible sale of assets likely beneficial
July 16 (Reuters) -Shares of Warner Bros Discovery WBD.O rose more than 6% on Tuesday after Bank of America (BofA) Global Research said the company could create more value for its shareholders if it explored strategic options, including a potential sale.
The loss-making media conglomerate has been reeling from the effects of subdued advertising in the U.S. and certain international markets. The fallout of last year's Hollywood strikes have also impacted the company's studio segment.
Warner could explore a scenario where it could spin off its direct-to-customer and studio assets as a standalone company, BofA said in a note on Tuesday.
This could be a negative for Warner's debt, but could be accretive to equity value, it added.
BofA added that Warner could explore selling itself or its streaming services could be merged with another streaming entity and potentially co-owned.
Since the merger between Discovery and AT&T T.N spin-off Warner Media in 2022, shares of Warner Bros Discovery have fallen nearly 70%.
Warner did not immediately respond to a Reuters request for comment.
"While several financial assumptions behind the combination of Warner Media and Discovery have not materialized, we still believe several of WBD's assets are best in class with tremendous unrecognized value," BofA said.
Fears of market saturation have forced media companies to bundle their streaming businesses and offer discounted rates to attract customers who are wary of signing up and paying for numerous individual services.
Recent media reports also indicate that Warner could lose broadcasting rights for National Basketball Association in the next round of negotiations with distributors.
This could add to investor concerns about the media giant's role in the new sports-streaming partnership with Disney DIS.N and Fox FOXA.O.
Reporting by Harshita Mary Varghese; Editing by Shailesh Kuber
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
