The future of Warner Bros. Discovery is a hot topic, and MoffettNathanson Senior Analyst Robert Fishman is among those on Wall Street wondering what’s next for the company led by David Zaslav.
In a note to investors on Thursday, following the release of WBD’s Q3 results that came within expectations, Fishman noted that many observers are tracking every M&A headline surrounding the future of Warner Bros. Discovery. Unfortunately, these eager investors did not get any official update from the company on an internal strategic review process during WBD’s third quarter earnings call.
For Fishman, “Given the value of its portfolio of assets, including industry-leading premium IP across Warner Bros. Studios and HBO, we expect any updates on the process with potential bidders to remain the primary driver of the stock performance going forward.”
At $22.55 in after-market trading on Thursday, subscriber growth that fell short of Street expectations could be another focal point for shareholders. In Fishman’s eyes, a bidding war is the top talk topic, as it would create “meaningful upside” for WBD shares even at these elevated levels. “Ultimately, the Board could be forced to compare offers for different combinations of individual assets versus the entire company,” Fishman writes. But, now that Q3 results have come and gone without major surprises, “we would expect more chatter about possible bids to heat up in the weeks ahead,” he notes.
Until then, operating momentum at Studios, scaling Streaming, and managing Global Linear Networks declines are what Zaslav and the C-Suite must focus on.
Global Linear Networks “maintained a steady pace of decline,” Fishman notes, with revenue down 23% (1% below MoffettNathanson’s estimate). However, EBITDA came in better, down 20% (ahead of the 25% decline MoffettNathanson had forecast).
The loss of NBA rights will be a tough pill to swallow, Fishman concludes, as MoffettNathanson reiterated its 2025 EBITDA estimates, leaving it unchanged at $6.35 billion, a decline of 22% versus last year.
