So remember yesterday, when we talked about how Comcast (CMCSA) might be tapping Saudi money in a bid to beef up its own bid for entertainment giant Warner Bros. Discovery (WBD)? New reports suggest it may not be the only one, and Paramount Skydance (PSKY) is set to do likewise. Not just do likewise, either, but go beyond that to hit up several other sovereign wealth funds. The news was good enough for Warner shareholders, though, who sent shares up over 3% in the closing minutes of Tuesday’s trading.
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Reports note that Paramount has turned to the Saudi Arabian sovereign wealth fund, but also its equivalents in both Abu Dhabi and Qatar. And, just to top it off, RedBird Capital is coming in on the action too, which suggests that the bid may reach the $70 billion level or even beyond. Paramount would have the bulk of the offer at $50 billion, but the sovereign funds would each kick in $7 billion.
It is unclear, however, if that price is inclusive of debt or not, which may change things still further. Reports also note what the sovereign funds would get out of the deal: “…an IP, a movie premiere, a movie shoot.” Apparently, the wealth funds are really only interested in “…reputation and soft power.”
Oh, and Trump Bought In
In what might be one of the oddest twists of all, President Trump himself actually took a hand in the action, as Trump bought $1 million worth of Warner debt. The actual amount is “…between $500,001 and $1 million” worth of Warner bonds, and these were purchased back in September. Reports note the bonds are senior unsecured notes with a 3.625% rate, and are issued by Discovery Communications LLC, which is part of Warner Bros. Discovery.
With reports noting that Trump himself is supporting the Paramount buy of Warner, that makes things look just a little dodgy. It is especially odd that he would support Paramount to buy Warner, given that Paramount owns a news operation in CBS News, and would be buying a second in Warner’s CNN. But perhaps putting Bari Weiss in charge softened Trump’s stance on the matter.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on eight Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 139.37% rally in its share price over the past year, the average WBD price target of $22.08 per share implies 6.8% downside risk.
