Warner Bros Discovery (WBD)one of the colossi of global entertainment in which it can be invested through Cedears, announced a deep restructuring: the company will be divided into two independent units that will begin to quote separately in the New York Stock Exchange. While the announcement was received with skepticism from investors – the shares fell 2.95% on Monday – the investment bank Bank of America (Bofa) He was optimistic and He recommended buying shares of the firm.
According to a report published by Bofa, the split will allow Warner Bros to release hidden value in its assets and operate with greater flexibility in an increasingly competitive market. The financial entity maintained its “purchase” recommendation and set a target price of US $14which would imply a 48% Upside compared to the current price (US $ S9.53).
What will the Warner Bros division be
The company reported that restructuring will be done through a Tax free transactionand will give rise to two new companies that will quote separately:
David Zaslav, current CEO of WBD, will lead the brand new streaming & Studios. Meanwhile, Gunnar Wiedenfels, financial director of the company, will become CEO of Global Networks.
What does Bofa see that the market does not recognize
From Bank of America they explained that this maneuver could represent the best way to Unlock value within the company, today tarnished by the consolidated structure and the high level of debt. “With streaming & Studios operating as an independent and lighter entity, we anticipate a significant interest of both institutional investors and private funds,” said analysts.
Bofa identified four catalysts Key that could boost the value of the actions in the coming months:
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More favorable comparisons for the film and TV studies business.
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A possible American advertising market recoveryafter years of stagnation.
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Higher growth in segment Direct to the consumerleverage in HBO Max.
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Strategic options for Global Networks, such as mergers, asset sales or consolidations.
In the Bank’s opinion, these measures would allow to optimize structures, reduce costs and enhance the generation of free cash flow, key to face the financial commitments of both units.
Market reaction and look from Argentina
Despite Bofa’s support, The immediate market reaction was negative: On Monday, June 9, WBD shares retreated 2.95% on Wall Street. For some analysts, the leave reflects doubts about the time and costs that will imply executing a separation of this magnitude. Others fear that Global Networks, with traditional cable signals, in front of deeper structural challenges.
However, from the investment environment it is highlighted that this kind of operations usually show its benefits in the medium termonce the new structures operate with independence and strategic focus.
In the case of Argentine investors, especially those who operate with Yields (Certificates of foreign actions that quote on pesos), the Warner Bros movement can be a Attractive alternative to dollarize wallets Without leaving the local market. In a context of local uncertainty, assets linked to global entertainment consumption – a historically defensive sector – gain prominence.
The Warner Bros Discovery division marks a turning point for the company and could represent an attractive investment opportunity if Bank of America projections are met. While the market showed initial caution, the background of the operation seems to point to a clear strategy: put iconic active value that, under a single structure, failed to take off.
Source: Ambito
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