Hollywood shook today.
AT&T is dumping Disney-rival WarnerMedia onto another Disney rival, Discovery. WarnerMedia (owner of HBO Max) and Discovery (Owner of Discovery+) will combine into an entertainment juggernaut that will take on streaming rivals Netflix and Disney+.
As it is currently understood, Discovery will essentially absorb WarnerMedia’s entertainment assets and the head of the new combined entity is Discovery CEO David Zaslav.
From CNBC…
Under the agreement, AT&T will unwind its $85 billion acquisition of Time Warner, which closed just under three years ago and form a new media company with Discovery. The deal would create a new business, separate from AT&T, that could be valued at as much as $150 billion, including debt, according to The Financial Times.
The new joint venture will create one of the largest entertainment companies on the planet and easily rival Disney, Amazon and Netflix.
As a result, the news also shook the stock market. Shares of Discovery were up 9% Monday morning, before flattening out about an hour after markets opened. AT&T’s stock price was up more than 3%.
Disney stock seemed to be somewhat negatively affected by the news today, likely due to the announcement of a legit competitor looming on the horizon.
It’s worth noting that Disney stock has been on the decline since the Q2 2021 earnings call, in which Disney missed their expected Disney+ subscriber numbers by approximately 6 million.
From CNBC…
Disney — The media giant’s share price sank 2.6% after it missed revenue and streaming subscriber estimates. Disney earnings of 79 cents per share, well above the 27 cents per share expected by Wall Street, according to Refinitiv. The company made $15.61 billion in revenue, missing an estimate of $15.87 billion. Disney missed on subscriber estimates for Disney+, coming in at 103.6 million paid subscribers. It was expected to post 109 million.
The Motley Fool still seems to think that Disney is a good buy for the long haul, which is likely very true. The theme park business is finally beginning to rebound after a tumultuous year, and Disney is already taking booking for its newest cruise ship, the Disney Wish.
However, it does appear that competition in the streaming space — a space Disney is literally betting the farm on — is going to heat up. A lot.
[Hat Tip: CNBC]
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