For those who thought that the deal to buy entertainment giant Warner Bros. Discovery (WBD) was a done deal, thanks to Netflix (NFLX) stepping in, it turns out the deal is not as done as we thought. As Paramount Skydance (PSKY) proves it will not give up that easily, it turns to the shareholders directly with a $108 billion war chest to change some minds. One of the faces involved in the Warner deal is familiar, though, and may have some crying foul before it is all said and done. The news was good enough for Warner investors, though, who sent shares surging up over 4.5% in the closing minutes of Monday’s trading.
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The familiar face in question? President Trump’s own son-in-law, Jared Kushner. A report from the New York Times (NYT) revealed that Kushner founded Affinity Partners, a private equity firm. And Affinity Partners put up some of the cash behind Paramount’s attempt at a hostile takeover. While Larry Ellison and RedBird Capital Partners will be putting up the $40 billion in cash required to make the bid, Affinity Partners is one of several other investors who will be helping to “offload” the investment.
It is unclear how much Affinity will get for its investment, or even how much it will put up to begin with. But given that the Trump administration will have to approve the deal—and it has already been seen preferring Paramount as a buyer to begin with—the result might well have some, as noted previously, crying foul.
Speaking of That Family Connection
Meanwhile, the Trump administration is already very concerned about the Netflix-Warner deal, with Trump himself coming out to say that it “…could be a problem.” Essentially, the one objection that anyone in government could have had to Netflix buying in is now the objection that everyone is running with. Netflix is already the leader in streaming by a wide margin, and bringing in the fourth-largest streaming platform—Max—on its side would make a competitor too big for the market.
While Trump himself has little to say about the deal, certainly, he has some connection to the Federal Trade Commission (FTC), which would need to approve the deal. And with bipartisan government support coming out against the deal as well, it may not matter what Trump thinks here, because too many other people agree with him.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on seven Buys and 11 Holds assigned in the past three months, as indicated by the graphic below. After a 146.97% rally in its share price over the past year, the average WBD price target of $21.88 per share implies 19.72% downside risk.
