- Following the acquisition of WarnerMedia, Discovery is poised for success, ready to integrate its enlarged content portfolio into streaming service Discovery+.
- Yet at current valuations, markets are expecting returns to shrink to historical lows, which would only be possible if Discovery+ fails to make ground on existing streaming services.
- Meanwhile, as-reported metrics mask the benefits of Discovery’s past acquisitions, including Scripps Networks, distorting perceptions around management’s ability to successfully convert acquisitions into higher returns.
- Given Discovery+’s momentum, the reach of its content distribution chain, and the quality of the firm’s new intellectual property, it is likely that the firm can outperform its modest expectations, suggesting equity upside is warranted.
For further details see:
Discovery: Following Disney's Lead For Streaming Success