Communications
Joe Cornell offers a detailed analysis of WBD’s planned spin-off of its Streaming & Studios segments. The move mirrors a broader media trend to separate faster-growing streaming assets from legacy cable operations. The split enhances strategic flexibility - Streaming & Studios could become a more attractive M&A target, while Linear Networks might be paired with a similar business. Joe’s SOTP valuation yields a consolidated target price of $15.00 per share (adjusting for a ~20.0% stake in the Streaming & Studios businesses) for WBD, which implies a potential upside of ~30% from the current market price.
Edition: 215
- 11 July, 2025
Special Sits Idea Forum
While all the stocks presented at MYST's latest buyside event could be considered undervalued, many offered significant (i.e. >50%) upside. The most differentiated ideas included: Blackbaud (improving fundamentals more apparent post-EVERFI divestiture; potential M&A target); HealthEquity (new legislation fuelling dramatic TAM expansion + bond portfolio repricing tailwinds); and JBS (multiple to expand as US listing drives increased passive ownership / index inclusion). More familiar names discussed included: Fluor (huge NuScale Power (SMR) monetisation catalyst not reflected in Street estimates); Teva Pharmaceutical (generics cash cow enabling innovative branded portfolio pipeline development); and Warner Bros. Discovery (well positioned for media consolidation wave amid forthcoming business separation).
Edition: 214
- 27 June, 2025
Communications
Arete sees a $4.5-5bn EBITDA improvement from streaming by the end of the decade and thinks that the expected loss of the NBA means that '26E will likely mark the low-point of group EBITDA (at ~$9.4bn), before international streaming growth is sufficient to offset linear declines. The market is clearly not expecting any stabilisation right now, with the stock implied at <3x P/FCF in '25E. Leverage should hit management's 2.5-3 turn target range in '25E and WBD would then be able to buy back stock very accretively. This scenario creates a significant potential upside case, with Arete’s revised TP of $24 implying the shares could more than triple, and yet still trade only at ~10x trough P/FCF.
Edition: 189
- 28 June, 2024
Communications
DTC subscriber growth has stalled in the face of price increases, marketing cuts and future content reductions, while the company’s cost allocation accounting means streaming losses in FY22 ($3.4bn) were understated relative to the accounting policies of Warner Bros Discovery / Comcast to the tune of $2.5bn, giving an indication of the challenges. Despite assuming a DIS / Hulu merger, Arete expects DTC to generate one-third less EBITDA long-term than they previously modelled and have lowered their TP from $94 to $65 (25% downside).
Edition: 165
- 21 July, 2023
Communications
The heavy lifting on restructuring is now largely complete (Paramount and Disney are just starting theirs) with expenses down $2.8bn and cash content spending running at ~$4bn/qtr. Studios look likely to recover from 2H23, advertising looks to have bottomed, and the new Max streaming platform has a good mix of content that should be attractive to all viewers meaning top and bottom line should show amelioration from here. Arete forecasts EBITDA of $11.2bn in 2023 and FCF of $4.4bn. For 2024, they expect a further improvement in EBITDA to $13.1bn and FCF to jump to $5.9bn (net debt declines to $36.1bn (2.8x) allowing a buyback to start late in the year). TP $31 (130% upside).
Edition: 162
- 09 June, 2023