2024-02-25 07:17:27 ET
Summary
- Warner Bros. Discovery has found a significant cash cushion that is helping with the transition of its assets to become a formidable competitor.
- The company is prioritizing collecting money owed, which lowers the deleveraging risk considerably.
- Despite challenges in the advertising market, and elsewhere in the business, management has increased cash flow and decreased leverage, improving the debt ratio.
- A shrinking business is not unusual for an acquisition that was badly managed.
- The lack of DTC losses going forward also provides more cash in the future.
The big news for Warner Bros. Discovery ( WBD ) is that management found a cushion that, so far, the market could care less about. But that rather significant cash cushion ( that I discussed when management found it) has made the transition of these assets to a formidable competitor far easier. It is not unusual for the business to shrink, even without environmental reasons. Some assets may not even have a future other than as a "cash cow". But cash flow is key to any deleveraging process until management finds its footing. Right now, that cash flow is giving management the time it needs to get this giant acquisition going in the right direction.
Working Capital Initiatives
As management had mentioned before, the basics of collecting money owed did not appear to be a priority prior to the acquisition. Collecting that money now is a priority....
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Warner Bros. Discovery: Love Those Working Capital Initiatives