The plan for entertainment giant Warner Bros. Discovery (WBD) to break off its network operations into their own package was met with some skepticism, and some optimism as well. That point was made clear today as a post-breakup future is considered in some sectors. Investors seem to be warming up to the idea, though, as they gave shares a fractional boost in the closing minutes of Monday’s trading.
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The split will see the streaming and studio operations remain as their own operation, and the legacy television operations—like Discovery and CNN—become their own operation as well. This, interestingly, is where most of Warner’s debt will end up going, and that will likely make it a marked entity from day one.
In fact, some regard this as the ultimate failure of an earlier battle strategy, the one that saw Warner Bros Discovery exist in the first place. The combining of the two was supposed to bring “…operational synergies and streaming dominance.” But what it ended up providing was “…a confused portfolio hampered by billions in debt and a deeply diluted brand experience.” Thus, it is hoped, cutting off the legacy operations altogether will allow for a better focus and improvements accordingly.
Production Shutdown
And, in aid of that, a second report emerged noting that TNT Sports would no longer be producing content for the National Basketball Association’s (NBA) cable network. This partnership has been in place since 2008, reports note, though the shutdown actually makes sense in light of one key fact: the NBA has moved its television rights to Comcast’s (CMCSA) NBCUniversal.
TNT Sports’ Luis Silberwasser noted that “…we have mutually decided to part ways at the end of the 2024 – 2025 season,” following a set of discussions between TNT Sports and the NBA. Silberwasser also noted that “…several proposals” were issued to keep the pair working together, but “…we were unable to agree on a path forward that recognized the value of our expertise, quality content and operational excellence that our fans and partners have come to expect from TNT Sports.”
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on 10 Buys and eight Holds assigned in the past three months, as indicated by the graphic below. After a 59.15% rally in its share price over the past year, the average WBD price target of $12.31 per share implies 7.6% upside potential.
