What happens to discovery stock when it merges with Warner Bros?
Immediately before the merger, Discovery plans to reclassify its three share classes into one share class. Then, Warner Bros. Discovery will automatically convert each share of Discovery common stock into one share of WBD common stock. Warner Bros. Discovery's stock price has yet to be finalized.
Is discovery stock a good buy after AT&T merger?
Discovery (DISCA) Stock Is a Good Buy After AT&T Merger News By Mohit Oberoi, CFA May. 17 2021, Published 11:04 a.m. ET Discovery (DISCA) stock is trading sharply higher on May 17 after it announced a definitive agreement to combine with AT&T’s media assets.
Is discovery stock a good buy?
Discovery has over 15 million paying streaming subscribers globally, while HBO and HBO Max reportedly have 64 million subscribers globally. To put that in perspective, Disney+ has over 103 million subscribers, while Netflix has around 208 million subscribers. Discovery stock looks like a good buy.
What happens to stock price when a company merges?
Specifically, the price of the acquiring firm usually experiences a temporary drop in value, while the share price of the target firm typically spikes. Post-merger, the combined entity of the newly-formed entity typically exceeds the value of each company during its pre-merge stage.
Will AT&T shareholders get Discovery stock?
On the closing date of the transaction, anticipated to be in April, AT&T shareholders will receive, on a tax-free basis, an estimated 0.24 shares of stock in Warner Bros. Discovery, Inc. (WBD) for each share of AT&T common stock.
Will Warner Brothers Discovery pay a dividend?
Warner Bros. Discovery stock, which was up 0.4%, to $23.10, on Thursday, has no dividend and the company has no current plans to pay one as it focuses on debt reduction.
Is Discovery stock a buy now?
That's a market cap of just $12.5 billion on 2021 revenue of $12.2 billion for the former Discovery Inc....Warner Brothers Discovery Stock Is a Speculative Buy At Best.TickerCompanyCurrent PriceWBDDiscovery$23.94Apr 19, 2022
Is Discovery taking over CNN?
Discovery takes control of HBO, CNN, and Warner Bros., creating new media giant. (CNN) -- Discovery's merger with WarnerMedia took effect on Friday afternoon, creating a streaming media giant led by CEO David Zaslav. The deal combines two treasure troves of content and foreshadows further changes in the streaming era.
Is Warner Bros discovery a good investment?
The rating outlook is stable. In terms of forward non-GAAP P/E, WBD is currently trading at 36.05x, which is 106.3% higher than the 17.47x industry average. Also, its forward Price/Book of 4.54x is 105.1% higher than the 2.21x industry average.
What will be the share price of Warner Brothers Discovery?
$17.50$ 17.51CloseChgChg %$17.50-0.50-2.78%
What is discovery stock selling for?
Performance OutlookPrevious Close23.07Ask0.00 x 1100Day's Range22.78 - 24.5152 Week Range21.66 - 39.70Volume22,358,9223 more rows
Does Discovery stock pay a dividend?
In its 2022 10-K report released in February, Discovery said: “We have not paid any cash dividends on our Series A common stock, Series B common stock or Series C common stock, and we have no present intention to do so.”
Will Warner Bros. Discovery be publicly traded?
Discovery. The combined company began trading Monday on the Nasdaq exchange with the ticker symbol WBD.
Who is buying Discovery Channel?
WarnerMediaDiscovery. AT&T's WarnerMedia unit and Discovery Inc said on Friday that the two firms have completed the merger.
Is Discovery Plus and HBO Max merging?
Share All sharing options for: WarnerMedia and Discovery have completed their mega-streaming merger. The parents of HBO Max and Discovery Plus have officially completed their merger, allowing WarnerMedia and Discovery to build what the companies have said will be “the most differentiated content portfolio in the world. ...
Who owns Discovery media?
Discovery Channel (known as The Discovery Channel from 1985 to 1995, and often referred to as simply Discovery) is an American cable channel owned by Warner Bros. Discovery, a publicly traded company run by CEO David Zaslav....Discovery Channel.ProgrammingOwnerWarner Bros. DiscoveryParentWarner Bros. Discovery Networks13 more rows
Which stock has the highest dividend?
Highest current dividend yieldsCompanyTickerCurrent dividend yieldVornado Realty TrustVNO, -5.40%6.25%ONEOK Inc.OKE, -6.63%5.87%Kinder Morgan Inc. Class PKMI, -5.11%5.80%AT&T Inc.T-US5.25%12 more rows•May 25, 2022
Is Disney paying a dividend now?
The Walt Disney Company currently does not pay a dividend to its shareholders. Disney stopped paying dividends in 2020 in an effort to conserve cash.
Warner Bros. Discovery
The agreement between Discovery Inc and AT&T, owners of WarnerMedia, was announced in May 2021. The plan sets out to create an international entertainment company by combining WarnerMedia’s premium entertainment, sports and news programmes with Discovery’s leading global content catalogue.
AT&T dividend payout to suffer
After purchasing Time Warner in 2018, AT&T acquired the catalogues of HBO, Warner Bros and Turner. The announcement of WarnerMedia’s merger with Discovery came as a surprise, especially since the company’s growth focus had been on HBO Max according to Morgan Stanley.
How many countries are there for Discovery Channel?
Studios, HBO and MBO Max, The Turner channels (TNT, TBS, CNN), as well as Discovery's comprehensive portfolio of unscripted content. And it will be available in 220 countries and 50 languages.
Is Discovery still a niche player?
Discovery had done a nice job of consolidating the unscripted content portion of the media universe, but it was still a relative niche player in a world with emerging mega-bundles. The new company, of which Discovery shareholders will own about 29%, should become more of a force in global streaming.
How many subscribers does Discovery have?
Now, after the merger is complete, we should look at the financials of the merged entity. Discovery has over 15 million paying streaming subscribers globally, while HBO and HBO Max reportedly have 64 million subscribers globally.
What is the difference between AT&T and Discovery?
Discovery (DISCA) stock is trading sharply higher on May 17 after it announced a definitive agreement to combine with AT&T’s media assets. Discovery shareholders would own 29 percent of the new entity, while AT&T shareholders would hold a 71 percent stake in the new company.
Is Discovery stock a good buy?
Discovery stock looks like a good buy. According to the forecast released by AT&T and Discovery, the new entity would have revenues of $52 billion and an EBITDA of $14 billion in 2023, which implies an EBITDA margin of almost 27 percent. The companies are forecasting a free cash flow conversion ratio of 60 percent, which looks very healthy.
Debt Paydown Is the Third Benefit to T Stock Holders
However, there is a third positive event that will help the remnants of AT&T, and by extension its shareholders. Once it receives all the regulatory sign-offs it needs to close the merger, AT&T will receive $43 billion in payments from the new Warner Bros Discovery company.
Scenario Analysis for T Stock
Keep in mind that this is just one possible scenario. We don’t know the exact spin-off ratio for Warner Bros. Discovery shares (let’s give it the symbol WBD.) But we know that the remaining company’s stock (T) will fall by the dollar value amount of the WBD spin-off. Additionally, the T stock dividend will be cut and this could also make it drop.
What to Do With T Stock
You can probably see that the best returns will likely accrue for shareholders that hang on to both their AT&T shares and their Warner Bros. Discovery shares. That is what long-term investing is all about. However, there could be some pain in the short-term, as many shareholders don’t like to deal with change.
The Mechanics of the Spin-Off and Dividend Cut
However, given that the value of the spin-off could take $6 to $7 off of the post-spinoff price of AT&T, its final dividend will be closer to 6.0% to 6.3%.
Where AT&T Stock Could Trade
Nevertheless, this 6%+ dividend yield is very close to where the T stock has been trading in the past six months to a year. For example, Seeking Alpha has a page showing that in the last four years the average dividend yield has been 6.65%. This is slightly higher a yield than now and implies that T stock could fall a bit from here.
What to Do With T Stock
In the Feb. 1 press release about the spin-off, AT&T made it clear that we don’t know the exact value of the spin-off. This is because we don’t yet know the final number of shares WBD will have. Since the deal is seen as closing (according to the press release) in Q2, 2022, the number of shares can’t be known up until right before the close.
What happens after a merger?
After a merger is complete, the new company will likely undergo certain noticeable leadership changes. Concessions are usually made during merger negotiations, and a shuffling of executives and board members in the new company often results.
Why do share prices rise during a pre-merge period?
In contrast, shareholders in the target firm typically observe a rise in share value during the same pre-merge period, mainly due to stock price arbitrage, which describes the action of trading stocks that are subject to takeovers or mergers. Simply put: the spike in trading volume tends to inflate share prices.
What is merger agreement?
Key Takeaways. A merger is an agreement between two existing companies to unite into a single entity. Companies often merge as part of a strategic effort to boost shareholder value by delving into new business lines and/or capturing greater market share.
Why do shareholders of both companies have a dilution of voting power?
The shareholders of both companies may experience a dilution of voting power due to the increased number of shares released during the merger process. This phenomenon is prominent in stock-for-stock mergers, when the new company offers its shares in exchange for shares in the target company, at an agreed-upon conversion rate .