So why did a spinoff of WarnerMedia make sense as a key step in the combination? He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. Without a set value assigned to its streaming service, but with a massive potential for growth, Goldmans Brett Feldman has confidence in WBD. Discovery in a merge that equates to a $43 billion transaction. Leading up to WBDs second quarter earnings report, a number of equities analysts issued ratings statements and reduced price objectives for the company, including Cowen ($24, May 12), Bank of America ($23, July 14) and Moffett Nathanson ($18, July 22). The Wall Street Journal this month reported that Warner Bros. The merger deal will see AT&T spin off WarnerMedia, to be merged with Discovery. The firm maintained its market perform rating on Warner Bros. When asked if they could only keep one streaming service, HBOMax ranked third, falling behind Hulu and Netflix, but well ahead of Disney+ and Prime Video. Discovery (NASDAQ: WBD) when the stock went public last April. Now that the close of the WarnerMedia deal is approaching, we are near the starting line of a new era for AT&T, said Stankey on Friday. The new company, of which Discovery shareholders will own about 29%, should become more of a force in global streaming. Please. Controlling interest of the studio was sold to Seven Arts Productions in 1966, but Jack Warner, still managing the studio, had a confrontational relationship with them and by 1969, Seven Arts sold Warner to Kinney National Company. The specific transaction structure will be executed in the seven steps as follows: Step 1 The Separation - Prior to AT&T's distribution of rights to shares of WBD common stock to existing AT&T shareholders as of record date and the final merger completion, AT&T will have to transfer all of its equity interests in the assets and liabilities attributable to its WarnerMedia business to the Magallanes, Inc. Spinco. And right or wrong, management has made a decision to invest a lot of the incoming funds into a number of investment initiatives. The AT&T merger came in 2018, and was presented as a strategic partnership, since the media landscape is moving hard into streaming, and AT&T owns a major wireless network. The company finished the quarter with 96.1 million subscribers. Discovery has faced more cautious advertisers, ongoing cord-cutting, competition within streaming and upheaval created from the merger deal itself. The Hollywood Reporter is a part of Penske Media Corporation. Discovery. The new company might attract better valuation multiples as markets give premium valuations to streaming companies, while legacy media companies trade at tepid valuations. 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. On 7.14 billion current shares, that's about $1.18 per share, just a little more than half the $2.18 payout today. on companies with competitive advantages and strong balance sheets. distribution of Spinco common stock to eligible AT&T shareholders as of record date), which occurs prior to completion of the WBD merger. If you want full access to our Model Portfolio and all our current Top Picks, feel free to join us for a 2-week free trial at High Dividend Opportunities. NEW YORK and DALLAS, April 8, 2022 Today Discovery, Inc. and AT&T Inc. * ( NYSE:T) announced that they have closed their transaction to combine the Warner Bros. 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 2025, while expenses are expected to accelerate. Please note that I am in the process of planning a subscription service with Seeking Alpha's Marketplace. We will not launch any new markets for the time being. I'll be launching in the near future with a legacy discount for early subscribers and I'll be sharing more details as we ramp up to launch in the coming months. With over 40 individual picks yielding +7%, you can supercharge your retirement portfolio right away. The final green light for the megadeal came at a special shareholder meeting held online; shareholders of AT&T, led by CEO John Stankey, do not need to vote on the combination. 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. Our focus is to invest in content and platforms that extend the life and return of our global IP, and position us to drive greater returns out of each dollar of content spend than our peers and to ultimately drive free cash flow. 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. Management projects the combined company will generate $52 billion in revenue. 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. In an effort to shore up the bottom line, the company has cut jobs and content including CNN+ and a Batgirl film set for HBO Max. Step 3 Special Cash Payment - Prior to AT&T's distribution of rights to shares of WBD common stock to existing AT&T shareholders as of record date and the final merger completion, the Magallanes, Inc. Spinco will make a "Special Cash Payment" to AT&T 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. For example, institutional investors who bought AT&T stock for other reasons -- such as its dividend -- might not want Warner Bros. Of course, the numbers behind the earnings report pertain to the former Discovery, Inc; however, management provided some important metrics related to WarnerMedia, as well as some relevant commentary. There is currently no definitive answer to when the WBD merger will close or what its post-close value will be. Discovery's share price when the new company began trading earlier this year. The service will allow you to follow my model portfolio, interact with me directly, and participate in chat rooms with other subscribers. Here are the key levels for David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. All Right Reserved. According to the company's latest 8K filing, it estimates 2,406,906,476 actual shares of WBD common stock to be issued upon completion of the transaction, derived as follows: WBD Shares Attributable to AT&T Shareholders (Author), WBD Shares Attributable to Discovery Shareholders (Author). Without the ability to invest billions in content to compete with the likes of Netflix, legacy cable companies were likely to get left behind, or at least become niche offerings without much growth. 111). I own a house with my husband and mother. The streaming space is crowded, and Warner Bros. ET. S&P rates WBDs debt as BBB-/positive, the lowest level of investment grade. The idea is that Warners has not been fully capitalizing on the brand's potential. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Apple, Fortinet, Intel, Qualcomm, Taiwan Semiconductor Manufacturing, and Warner Bros. ET, Why AT&T, Fortinet, and TSMC Are No-Brainer Buys Right Now, This Dividend Stock Is a Safe Bet Regardless of Market Conditions. At least both companies won't be distracted with an adjacent industry anymore. (I update this score on at least a quarterly basis for readers.). The estimated transaction value takes into consideration the closing price of $25.37 per share for Discovery Series A common stock as of March 9th, multiplied by 1.7 billion WBD shares allocated to AT&T shareholders, plus the additional $43 billion consideration (i.e. AT&T Ex-Distribution Trading - AT&T shareholders can engage in "Ex-Distribution Trading" during the two-way trading period if they wish to only sell their right to AT&T RemainCo and retain their stock dividend pertaining to the WBD transaction. Discovery planned to keep Discovery+ as a standalone streaming platform, as the company weighs how to make more of its content available in a single place. That compares to $140 million in net income and EPS of $0.21 in the comparable quarter. WBD currently trades for $18.88 a share. There was an unknown error. takes the proverbial cake, with a stock price that plummeted over 65%. Copyright 2023 MarketWatch, Inc. All rights reserved. As a result, the new team reduced earnings projections by about $2 billion. The thinking is that this could lead to a surge in subs when the two services are combined. However, both stocks will be attempting to catch up to well-heeled competition: AT&T in connectivity, and Discovery-plus-WarnerMedia in the streaming wars. Just a few years ago, the same team acquired and integrated Scripps Networks into Discovery. To make the world smarter, happier, and richer. Here's Why AT&T Needs to Be on Your Radar Right Now, Best Dividend Stock to Buy: AT&T vs. Ford vs. Intel, 2 Growth Stocks That Can Turn $250,000 Into $1 Million by 2030, Billionaire Investor Bill Ackman Is Raking In $97 Million In Annual Dividend Income From These 2 Stocks, 1 Bargain-Basement Warren Buffett Stock Down 78% to Buy Before It Starts Soaring, 3 No-Brainer Stocks to Buy With $50 Right Now, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. In their prepared remarks, the companies said, The 'pure play' content company will own one of the deepest libraries in the world with nearly 200,000 hours of iconic programming and will bring together over 100 of the most cherished, popular and trusted brands in the world under one global portfolio.. Discovery to report a loss of 35 cents a share, on revenue of $11.2 billion. WBD, These issued Spinco common stocks can be exchanged for 0.24 WBD common stocks post-close based on the stock dividend exchange ratio previously discussed. Discovery stock after the merger has been unpleasant, management can still make His clients may own shares of the companies mentioned. Market Realist is a registered trademark. Apr 11, 2022 1:58 PM EDT. Boutique investment research shop providing professional coverage on disruptive thematic equities. 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). Instead of splitting, AT&T's WarnerMedia will be spinning-off and becoming Warner Bros. I wrote this article myself, and it expresses my own opinions. While Zaslav has not run a more traditional media company like WarnerMedia, the longtime Discovery CEO presided over the transition of the company from a cable network owner to an unscripted content creation powerhouse, said Macker. Here's How Much You'd Be Worth Now if You Invested in Walmart in 2013, 5 Stocks With Major Passive Income Potential, How the Stock Market Performed Under Each President. In his first earnings report since an April merger created one of the largest media companies in the U.S., on Aug. 4 Warner Bros. At this point, the majority of heavy lifting (related to restructuring charges etc.) Revenue came in at $11 billion, compared with $3.19 billion in the prior-year quarter. Discovery currently has 700 million shares outstanding, while 1.7 billion new shares will come to market as part of the transaction. 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. Shares of Warner Bros. I am a graduate of the U.S Army Ranger school and a former member of the 1st Ranger Battalion and The Old Guard (U.S Army Honor Guard.)
Rexwinkel Funeral Home Obituaries,
Articles D
