Max’s growth proves WBD’s content can compete with Netflix
This analysis is provided by Eden Bradfeld at BlackBull Research.
I’ve written a lot about WarnerBrothersDiscovery, and I’ve talked about it a lot in this newsletter.
Long story short — giant monolith formed by the merger of Discovery and the spun-out Warner assets of AT&T³.
The big issue was debt. They’ve managed to pay off a lot of debt — the company’s leverage ratio of 3.8x adjusted EBITDA is on its way to a ratio of 2.5x-3x gross leverage. They’ve paid a stunning 19 billion dollars of debt down in three years.
This led to their CEO, Zaz, being probably the most hated man in the industry. But that leads to strong cash flow — I’ve said before WBD is like a debt product with an equity stub; now it is slowly becoming a pure equity play, with cashflow up the wazoo — the point to remember here is that Max, the company’s streaming service, is growing well — Max added 4.5mn subscribers, versus analysts expecting 2.5mn. That’s proof in the power of their content — their IP — and it is an indication that the company’s content can compete with Netflix.
Stock is up 49% in 6 months, and trades around 11 bucks. If Zaz can continue to reduce debt, the stockholders should be very happy.
I’ve written a lot about WarnerBrothersDiscovery, and I’ve talked about it a lot in this newsletter.
Long story short — giant monolith formed by the merger of Discovery and the spun-out Warner assets of AT&T³.
The big issue was debt. They’ve managed to pay off a lot of debt — the company’s leverage ratio of 3.8x adjusted EBITDA is on its way to a ratio of 2.5x-3x gross leverage. They’ve paid a stunning 19 billion dollars of debt down in three years.
This led to their CEO, Zaz, being probably the most hated man in the industry. But that leads to strong cash flow — I’ve said before WBD is like a debt product with an equity stub; now it is slowly becoming a pure equity play, with cashflow up the wazoo — the point to remember here is that Max, the company’s streaming service, is growing well — Max added 4.5mn subscribers, versus analysts expecting 2.5mn. That’s proof in the power of their content — their IP — and it is an indication that the company’s content can compete with Netflix.
Stock is up 49% in 6 months, and trades around 11 bucks. If Zaz can continue to reduce debt, the stockholders should be very happy.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.