But if you’re a media investor, a banker, or someone who thinks like them, the meaning is different: It’s the end of Warner Bros.’ Morris Trust Reverse Restrictions Day. Discovery!
Now that these restrictions are gone, Warner Bros. Discovery is officially in play.
Except… maybe this isn’t going anywhere, yet.
When WBD was first formed, the conventional wisdom was that the media industry would go through cycles of consolidation and that WBD would eventually buy or merge with smaller companies or sell to a larger one – probably Comcast.
But so far we’ve seen very little buying and selling of major media assets, even though everyone from Discovery investor John Malone seems to believe it’s inevitable.
The most obvious reason: While the entire TV and movie industry appears to be in decline or worse, investors aren’t sure why combining two declining assets will ultimately create anything other than… a larger declining asset.
That’s likely why investors immediately reacted to the idea of a WBD-Paramount tie-up when that deal was floated late last year. (This apprehension also helps explain why there have been so few bidders for Paramount, which now appears poised to sell to a company controlled by David Ellison, the son of billionaire Larry Ellison.)
There’s also the question of who, if anyone, will be allowed to buy a major media asset in 2024, when President Joe Biden’s antitrust enforcers have made clear they are wary of consolidation in general and consolidation media and technology in particular. (Recent reminders, if you need them: Earlier this month, two WBD board members left those seats after a federal antitrust investigation – the same day antitrust enforcer Lina Khan came to the Jon Stewart’s show to talk about the “dangers of what’s happening.” This happens when you concentrate so much power and so much decision-making in a small number of companies.” Point taken!)
All of this explains why WBD stock has fallen 77% since the deal was initially announced in May 2021. If investors really thought Comcast, or someone else, was going to make a bid for WBD at Right now you might see this stock price. tick tock. It goes the other way.
So if no one is buying WBD anytime soon, what about parts of WBD? This prospect has been around forever, dating back to several ownerships and name changes: when WarnerMedia was called Time Warner, it considered selling HBO to Apple; Back when it was owned by AT&T, it considered selling its video game business. And there has been perpetual speculation about CNN combining with…someone…for a very long time.
WBD executives, meanwhile, insist they don’t want to sell any of their products. But they also have tens of billions in debt to repay, so a big sale might prove tempting one day, after all. And now, at least, they can do it without worrying about taxes.
businessinsider
