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1. Company Snapshot

1.a. Company Description

Warner Bros.Discovery, Inc., a media company, provides content across various distribution platforms in approximately 50 languages worldwide.It also produces, develops, and distributes feature films, television, gaming, and other content in various physical and digital formats through basic networks, direct-to-consumer or theatrical, TV content, and games licensing.


The company owns and operates various television networks under the Discovery Channel, HGTV, Food Network, TLC, Animal Planet, Investigation Discovery, Travel Channel, Science, MotorTrend, Discovery en Español, Discovery Familia, Eurosport, TVN, Discovery Kids, Discovery Family, American Heroes Channel, Destination America, Discovery Life, Magnolia Network, Cooking Channel, ID, the Oprah Winfrey Network, Eurosport, DMAX, and Discovery Home & Health brands, as well as other regional television networks.Its content spans genres, including survival, natural history, exploration, sports, general entertainment, home, food, travel, heroes, adventure, crime and investigation, health, and kids.The company also operates production studios that develop and produce content; and digital products and Websites.


It provides content through various distribution platforms comprising pay-television, free-to-air and broadcast television, authenticated GO applications, digital distribution arrangements, content licensing agreements, and direct-to-consumer subscriptions, as well as various platforms that include brand-aligned Websites, online streaming, mobile devices, video on demand, and broadband channels.Warner Bros.Discovery, Inc.is headquartered in New York, New York.

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1.b. Last Insights on WBD

Warner Bros. Discovery's recent performance is driven by stronger streaming and studio execution. The company's strategic separation aims to sharpen focus, unlock growth, and provide a clearer view of long-term value drivers. Its studio business is emerging as a core engine of EBITDA growth, driven by fresh creative energy and a global content strategy. Additionally, the company is exploring a potential sale or split, and has received interest from multiple parties, including Paramount. Institutional investors, such as Allspring Global Investments Holdings LLC, are also boosting their holdings.

1.c. Company Highlights

2. Warner Bros. Discovery's Q3 Earnings: A Strong Recovery

Warner Bros. Discovery reported revenues of $5.01 billion, slightly above estimates, with a net loss of $0.06 per share, narrower than the estimated loss of $0.06786 per share. The company's EBITDA is expected to meaningfully exceed $2.4 billion this year, driven by the strong performance of its studios and streaming segments. The company's Streaming segment is expected to contribute over $1.3 billion in EBITDA, with over 150 million total streaming subscribers expected by the end of next year.

Publication Date: Nov -14

📋 Highlights
  • EBITDA Growth:: Studios expect EBITDA exceeding $2.4B in 2024, on track for $3B target.
  • Streaming Subscribers:: HBO Max now in 100+ countries, 150M+ total subscribers by end of 2025.
  • Streaming EBITDA Contribution:: Segment to deliver $1.3B+ EBITDA in 2024.
  • Debt Reduction:: Net leverage ratio reduced to 3.3x EBITDA.
  • Sports Rights Transition:: NBA exit and new rights acquisition to add $100sM+ in 2025 benefits.

Segment Performance

The company's Motion Picture Group has regained its place as the leading motion picture studio, with a significant amount of original stories. Warner Bros. Television was recently recognized with 14 Emmy awards, including outstanding drama series for The Pitt. The linear networks continue to be a powerful cash flow contributor, with a long and profitable runway ahead.

Streaming Growth

The company is committed to scaling HBO Max globally, with the service now available in over 100 countries. The company has added over 30 million new streaming subscribers in three years, with a strong growth trajectory expected to continue. As Gunnar Wiedenfels mentioned, HBO Max will be an independent product, but also a skin on the same product platform as CNN, allowing for limited incremental operating costs.

Valuation Metrics

With a P/E Ratio of 113.17, P/B Ratio of 1.52, and P/S Ratio of 1.45, the company's valuation appears to be stretched. However, the EV/EBITDA ratio of 2.59 suggests that the company's enterprise value is reasonable relative to its earnings. The Net Debt / EBITDA ratio of -0.21 indicates that the company has a healthy debt position. Analysts estimate next year's revenue growth at -0.9%, which may put pressure on the company's valuation multiples.

ARPU Trends

The company expects to see growth in ARPU, particularly in the domestic market. Jean-Briac Perrette mentioned that the rollout of the ad-supported SKU is causing ARPU pressure, but expects an upward trajectory as fill rates increase and price increases are implemented on a regular cadence. The company's efforts to increase ARPU, combined with its strong content offerings, are expected to drive further growth.

Content Strategy

The company is focusing on investing in new IP, while also leveraging its existing franchises. David Zaslav emphasized the importance of working with the best creatives to tell the best stories, and the value of having a community-driven approach to content development. The company's coordinated approach to franchise management is expected to pay dividends in the long term.

3. NewsRoom

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David Ellison makes his case to the White House as Netflix bid for WBD edges out Paramount Skydance

Dec -04

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Warner Bros. Discovery bidding heats up, Wall Street has high rate-cut hopes

Dec -04

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

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Paramount Insists WBD-Netflix Deal Would Be DOA As It Presses Its Case

Dec -04

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Dow Jones Today: Major Stock Indexes Little Changed; Weekly Jobless Claims Unexpectedly Fall; Inflation Data on Tap Tomorrow

Dec -04

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Paramount believes it has path through Trump admin to get WBD deal approved: Puck's Matt Belloni

Dec -04

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Paramount Drops $5 Billion Bomb to Beat Netflix in Warner Bros. Bidding War

Dec -04

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Paramount Raises Concerns About Netflix's Bid for Warner Bros. Discovery

Dec -04

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.19%)

6. Segments

Networks

Expected Growth: 1.8%

Warner Bros. Discovery's Networks segment growth of 1.8% is driven by increasing demand for premium content, expansion of streaming services, and strategic partnerships. Additionally, the company's focus on targeted advertising, growth in affiliate fees, and cost savings initiatives contribute to the segment's growth.

Studios

Expected Growth: 2.2%

Warner Bros. Discovery's studio segment growth is driven by increasing demand for premium content, expansion of streaming services, and strategic acquisitions. The 2.2% growth rate is also fueled by the success of franchises like Harry Potter and DC Comics, as well as the company's ability to leverage its vast library of content across various platforms.

Direct To Consumer

Expected Growth: 3.5%

Warner Bros. Discovery's Direct-to-Consumer segment growth of 3.5% is driven by increasing demand for streaming services, expansion into new markets, and a robust content pipeline featuring popular franchises like HBO and DC Comics. Additionally, strategic partnerships and investments in technology to enhance user experience are contributing to the segment's growth.

Inter-segment Eliminations

Expected Growth: 0.0%

Inter-segment eliminations from Warner Bros. Discovery, Inc. remained flat at 0.0% growth, indicating no significant transactions between segments. This is likely due to the company's focus on consolidating its operations and streamlining its business units, resulting in minimal inter-segment activity.

7. Detailed Products

Warner Bros. Pictures

Production and distribution of feature films, including blockbuster franchises and original content

HBO Max

Streaming service offering a vast library of content, including TV shows, movies, and original content

CNN

24-hour cable news channel providing global news coverage and in-depth reporting

Discovery Channel

Cable television network offering educational and entertaining content focused on science, history, and wildlife

Cartoon Network

Cable television network offering animated programming for children and families

Warner Bros. Interactive Entertainment

Development and publishing of video games, including popular franchises like Batman and Harry Potter

DC Comics

Publisher of comic books, graphic novels, and digital comics, featuring iconic superheroes like Superman and Wonder Woman

8. Warner Bros. Discovery, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Warner Bros. Discovery, Inc. operates in a highly competitive industry, with many substitutes available to consumers. However, the company's strong brand recognition and diversified portfolio of media brands help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Warner Bros. Discovery, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often essential to customers, making it difficult for them to negotiate prices or terms.

Bargaining Power Of Suppliers

Warner Bros. Discovery, Inc. relies on a network of suppliers for content creation, production, and distribution. While the company has some bargaining power due to its size and scale, suppliers still have some leverage, particularly in the case of high-demand content creators.

Threat Of New Entrants

The media and entertainment industry is highly competitive, and new entrants can easily disrupt the market with innovative products and services. Warner Bros. Discovery, Inc. must continually innovate and adapt to stay ahead of new competitors.

Intensity Of Rivalry

The media and entertainment industry is highly competitive, with many established players vying for market share. Warner Bros. Discovery, Inc. faces intense competition from rivals such as Disney, Netflix, and Amazon, which can lead to pricing pressure and reduced market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.36%
Debt Cost 6.00%
Equity Weight 50.64%
Equity Cost 11.45%
WACC 8.76%
Leverage 97.46%

11. Quality Control: Warner Bros. Discovery, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Warner Bros. Discovery

A-Score: 3.9/10

Value: 5.3

Growth: 1.2

Quality: 4.4

Yield: 0.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

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Growth: 3.8

Quality: 2.3

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Momentum: 5.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.44$

Current Price

25.45$

Potential

-0.00%

Expected Cash-Flows