2024-03-18 05:45:39 ET
Summary
- Warner Bros. Discovery's shares are under pressure, but there may be value here.
- The company faces issues with debt, the cost of content, and finding a buyer.
- Given the company's assets, if CEO David Zaslav can improve the balance sheet and take advantage of IP, streaming and theatrical, then the stock will respond.
- Besides being a contrarian bet in the media space, there is the speculative possibility of the company being purchased; Comcast is one likely acquirer.
- This is a risky play, but if one holds for the long term, I believe WBD stock will reward such patience as costs and cash flow hopefully improve.
I've bought more Warner Bros. Discovery ( WBD ) stock since the earnings report. That's the first thing to know.
Because in this case, I am following the old adage: if I liked it at X price, then I really love it at much less than X.
I can't help it. I just see value here.
My previous article on the company/stock, back in December 2023, was bullish on the portfolio of properties and future financial guidance from management, backed by a compelling valuation. The stock has significantly dipped since then.
Contrarian, deep-value bets on distressed assets can be painful to watch, and even more painful to own, but Warner Bros. Discovery, put as simply as possible, is a collection of assets that can be leveraged to get out of this hole. Those assets comprise a library of content and a prestigious linear/streaming service (with a healthy dose of reality content on the Discovery side to balance out the prestige), as well as a theatrical division driven in part by the company's comic-book answer to Disney's ( DIS ) Marvel (DC, of course); they will, over time, help the stock recover....
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For further details see:
Warner Bros. Discovery: The Contrarian Thesis Continues