Granted, these days, when people think about potential buyers for entertainment giant Warner Bros. Discovery (WBD), the first thing they think is Paramount Skydance (PSKY). Netflix (NFLX) is also in the running on this one, and there is a very real potential for a major shakeup in the Indian market if the streamer ends up with the prize. This proved oddly hard for investors to countenance, and shares slid over 2.5% in the closing minutes of Tuesday’s trading.
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Neither Netflix nor Warner is talking much about it, but the idea that the deal could go through is still there. And it could be big for India. A few months back, we first heard about how Warner was looking to bolster its lineup of “homegrown heroes” in India. This included shows like Chhota Bheem, Jay Jagannath, and Little Singham.
Interestingly, Warner also delayed the launch of its HBO Max app in India, instead deciding to license content out to JioHotstar, which was JioCinema at the time. But if Netflix goes through with the purchase, then it would be a safe bet that JioHotstar would lose that content, and it would migrate to Netflix. Netflix could license content out as well, of course, but there is also a value in keeping up exclusivity. It would “…pull in some premium subscribers in metros,” noted Primus Partners managing director and co-founder Charu Malhotra.
HBO Max Subscribers Outraged…Again
That was when another problem struck for HBO Max subscribers elsewhere. With HBO Max currently one of the top five streaming platforms in the United States—it actually takes fourth place, based on Flix Patrol numbers—so the impact of any negative changes is particularly felt as it resonates through a larger part of the field.
The recent price hikes, coupled with David Zaslav’s pronouncement that HBO Max is “way underpriced,” along with the loss of CNN content, has left HBO Max subscribers feeling downright outraged. However, not everyone shares that sentiment. In fact, UBS hiked its price target on Warner recently from $10 to $20 per share, which is a major upward development. Though UBS did leave its Neutral rating in place, which suggests the possibility of problems down the line.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on four Buys and 11 Holds assigned in the past three months, as indicated by the graphic below. After a 147.15% rally in its share price over the past year, the average WBD price target of $16.96 per share implies 9.26% downside risk.
