So one of the biggest destabilizing elements of the market this week was the word that entertainment giant Warner Bros. Discovery (WBD) might have a potential merger afoot with Paramount Skydance (PSKY). But there is another possible suitor in the wings, and one we already saw coming: Netflix (NFLX). That news lit another, albeit smaller, fire under Warner shares and sent them up modestly in the closing minutes of Friday’s trading.
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Current reports suggest that Netflix may be considering a bid of its own, as Netflix CEO Ted Sarandos was recently spotted at the Crawford-Alvarez fight with David Zaslav. They could, of course, just have been two modestly well-known CEOs out for an evening of fun and pugilism. But they also might have been having words about what it would take to bring Warner under Netflix’s umbrella for good.
Interestingly, in this case, Netflix may not be interested in a split, either. Netflix may want the whole shooting match as it stands right now. That includes not only the studio and streaming arms for Warner Bros., but also the television content and channels from Discovery Global as well. That could represent a serious shakeup in the entertainment sphere, and one that might have less problem passing regulatory muster than Paramount’s might.
Growing Worry at CNN
A Netflix takeover might mean good news for CNN, which is already bracing itself for a Paramount takeover. CNN has already seen what happened to CBS News, which has already been put on a pivot to be less directly confrontational of a current president. The same might well happen to CNN, and given that CNN has possibly been more confrontational than CBS News ever was, the difference could mean a very big shakeup indeed.
Of perhaps even greater concern at CNN is the notion that, under Paramount, The Free Press operator Bari Weiss could end up as editor in chief of CBS News. If Paramount picks up Warner, then Weiss could have that same control over CNN. These are strictly speculative possibilities, of course, but represent very real possibilities nonetheless.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on five Buys and nine Holds assigned in the past three months, as indicated by the graphic below. After a 126.94% rally in its share price over the past year, the average WBD price target of $14.65 per share implies 24.05% downside risk.
