The potential sale of entertainment giant Warner Bros. Discovery (WBD) has brought with it several potential buyers. We knew about Paramount Skydance (PSKY) and its multiple offers. We knew about Netflix (NFLX) and Comcast (CMCSA). Now, there is a new entrant in the race, and not just an entrant, but the new frontrunner. The Saudi Public Investment Fund (PIF) is set to take a hand, and this news is not sitting well with investors at all. Warner shares were down over 2% in the closing minutes of Monday’s trading.
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Here is where things get interesting, however. Reports note that the Saudi PIF is looking to team up with Comcast on the deal, working in concert to give Comcast the resources it needs to outmass the other potential buyers, but give the figures with the money—the Saudi PIF—the necessary expertise to actually run the studio once it is acquired.
In fact, reports noted, Comcast CEO Brian Roberts went to Saudi Arabia recently, possibly in aid of setting up the necessary partnership. Bids should be submitted later this week, reports note, and that will sum up whether or not Comcast is in on its own, or suddenly has a big new partner to back it up. Reports additionally note, meanwhile, that the PIF is actually very interested in getting a stake in Warner.
Antitrust Problems
One of the potential Warner buyers, Netflix, may have a tougher time than expected picking up Warner. The government is raising antitrust concerns, noting that Netflix “…wields unequaled market power,” and for Netflix to pick up Warner would only compound the issue. Issa also pointed to remarks from Netflix that called movie theaters “outdated,” which echoed concerns raised by theater owners themselves.
Darrell Issa, one of California’s Republican representatives, raised the concerns, routing a letter expressing said concerns to Attorney General Pam Bondi as well as both the assistant attorney general for the antitrust division of the Justice Department, Gail Slater, and Federal Trade Commission chair Andrew Ferguson.
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 143.19% rally in its share price over the past year, the average WBD price target of $22.08 per share implies 2.9% downside risk.
