So while today is the big day for the bids to come in to buy Warner Bros. Discovery (WBD), one element seems to have slipped out. Reports now suggest that, despite everything we have already heard about Netflix’s (NFLX) stance on the theater, it will be going to theatrical releases, if it ends up buying Warner. This news did not help Warner shares much, however, as Warner was down fractionally in the closing minutes of Thursday’s trading.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
Warner already has contractual agreements to release movies to theaters, and Netflix would continue to honor those agreements should it win. This is good news, but as worried theater owners point out, it is really only good news in the short term. After all, just because Netflix is actively agreeing to not subject itself to a legal nightmare by stiffing theater owners today does not mean that Netflix will not pull the plug on theatrical releasing once those contracts expire.
We know that Netflix has treated the notion of theatrical releasing with almost grudging interest in the past. But we also know that Netflix has lost out on some talent before because of this stance, talent like Zach Cregger, whose horror fare has caught a lot of attention recently. A more public stance on keeping up theatrical releasing would likely endear Netflix to theaters more, and it certainly would be a new revenue stream for Netflix.
No Real Worries at HBO
There were some concerns about the future of HBO under a sale, but Casey Bloys, its current head, is really not concerned. Interestingly, his lack of concern stems not from a belief that HBO is bulletproof, but rather is an acknowledgment that there is little he can do either way.
Bloys noted, “I’ll tell you something that I told the team. I had a town hall a couple weeks ago, and I said the only thing you can do in this process, and the best thing you can do, is just focus on your job, which is making the most impactful programming in whatever genre. All of that theoretical… it’s kind of a waste of energy, because I don’t know what’s going to happen.”
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 125.71% rally in its share price over the past year, the average WBD price target of $22.08 per share implies 3.56% downside risk.
