How closely does a business work with Israel? That is, increasingly, a matter of concern in many sectors. Microsoft (MSFT) recently saw employees protest the company’s involvement with Israel. Meanwhile, entertainment giant Warner Bros. Discovery (WBD) is not especially concerned, and is in fact passing on a pledge to not work with Israeli film institutions. The news proved only mildly disturbing to shareholders, though, who sent shares down fractionally in the closing minutes of Friday’s trading.
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With over 4,000 film industry figures recently signing a pledge to not work with Israeli filmmakers over connections to what the pledge calls “…the genocide and apartheid against the Palestinian people,” many looked to Warner to follow suit. But Warner passed, noting that the existence of such a pledge—released by a group calling itself Film Workers for Palestine—runs contrary to Warner’s established policies.
Warner officials noted that it is “…committed to fostering an inclusive and respectful environment for its employees, collaborators, and other stakeholders.” Warner also made it clear that an Israeli boycott would represent “…discrimination based on race, religion, national origin or ancestry.” Interestingly, Warner is not the only studio to pass on the pledge, with Paramount Skydance (PSKY) also rebuffing efforts.
More $60 Billion Projections
Nine days ago, we first got word that the final price tag to buy Warner is likely to be in the $60 billion range. That was what one “veteran media analyst” who did not want to be named at the time projected. But now, another report emerged suggesting the same price tag, which lends a little more credence to the idea that Paramount—or anyone else—is going to have to get their collective checkbook ready if they want to bring Warner under their umbrella.
The calculus behind such a projection does have some logic. First, there is the value of splitting Warner and managing its debt accordingly. HBO Max alone is expected to pull in $2.3 billion in 2027. Throw in its film library, which goes back over a century, include the cable networks, and the overall value of Warner comes in at a projected $74 billion. Apply a bit of a discount to draw interest, and the end result is about $60 billion.
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 11 Holds assigned in the past three months, as indicated by the graphic below. After a 133.89% rally in its share price over the past year, the average WBD price target of $18.77 per share implies 3.25% upside potential.
