Over the last few weeks, we have seen no shortage of speculation about who was going to buy entertainment giant Warner Bros. Discovery (WBD). But now, we have reports that one more potential buyer is out: Apple (AAPL). Apparently, Apple is passing on any plan to buy in on Warner, and that left Warner in an oddly positive position. Warner shares gained fractionally in the closing minutes of Monday’s trading.
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While Apple certainly could have made good use of Warner’s incredible content library and overall streaming reach to augment Apple TV+, Apple decided that it was not interested. There were several factors that could have contributed to this, as Apple did not mention a specific cause. But potentially, Apple pulled out due to anything from Warner’s substantial debt load to a potential regulatory scrutiny event.
Further, some believe that the Apple TV+ brand name would not have been especially helped by having a massive content library on its hands. Apple TV+ tends to focus on smaller-scale select titles rather than flooding the market with titles. And with even Netflix (NFLX) proving reluctant to buy in on Warner, it may be that Apple just decided the acquisition would have been too much for too little.
But What About Microsoft?
That was when another unexpected potential entrant showed up, as some asked the almost inevitable question: What about Microsoft (MSFT)? Certainly, Microsoft could put the Warner library and production studios to good use. And certainly, Microsoft has the cash to do the job. But there is one major point that would make a Warner buy an excellent move for Microsoft: OpenAI.
A vast library of intellectual property is not only a win on the surface, it is also a huge win for training AI. Further, it opens up incredible possibilities; imagine the notion of being able to take the entire DC universe and have AI rewrite movies and shows, at will. Every DC-focused what-if a comic buff ever had could be played out in a heartbeat, all under the Microsoft umbrella. Meanwhile, Microsoft puts the Warner library as it sits in Xbox hands, and launches one serious new value-add in the process.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on six Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 140.93% rally in its share price over the past year, the average WBD price target of $18.64 per share implies 1.8% upside potential.
