Warner Bros. Discovery is the ‘best value in media’

By Sam Boughedda

BofA analysts declared in a research note Wednesday that Warner Bros. Discovery (NASDAQ:) is the “best value in media.”

The analysts, who maintained a Buy rating and $21 price target on the stock, said the company’s management has implemented a “tremendous amount” of operational and strategic changes since closing the merger in April and they anticipate it will deliver on its goal of $2bn+ in incremental synergy in 2023 with a longer-term cumulative target of $3.5 bn+.

“Management focus is on driving EBITDA and FCF across their asset base. In our view, there is a lot of low hanging fruit in almost every division where they can be more efficient (structure and costs) and monetize better (advertising and subscriber fees) by offering consumers a better product,” wrote the analysts.

In the near term, the analysts believe the company’s top priority is to execute the launch of its new streaming platform, which is expected in 2Q23, while they added that sports are a key part of the firm’s portfolio, but the economics need to work.

“The key priority of senior management over the next 6 months will be to launch their new, yet to be named, combined streaming service. The focus will be to provide a vastly improved user interface, recommendation engine and content mix that appeals to all four quadrants,” stated the analysts. “WBD has a solid U.S. sports portfolio which comprises March Madness, NHL, MLB playoffs and the NBA. The newly emerged WBD is (finally) beginning to maximize the value of their sports content by putting Sports and News along with entertainment content under one unified advertising salesforce.”

WBD shares are up 1% Wednesday at the time of writing.