The consolidation and shakeout in the media sector will have repercussions for investors. Netflix (NFLX) outflanked Paramount Skydance (PSKY) in its bid for Warner Bros. (WBD). It will pay $72 billion for the company.
Netflix’s winning bid hurt shares of Cinemark (CNK), IMAX (IMAX), AMC (AMC), and Reading International (RDI). The industry is bracing for heavy regulatory scrutiny that will prevent the deal from closing. Paramount Skydance’s CEO, David Ellison, may issue a strong enough complaint that the government might demand concessions or nix the deal.
Investors may look out for companies like Walt Disney (DIS) reversing its downtrend.
Comcast (CMCSA) looked like it had a chance to merge its streaming assets with Warner Bros. CMCSA stock is finding support levels at $27.00. Value investors might accumulate shares, now that the company is not the winning bidder for WBD stock. Instead, Comcast may restructure NBCUniversal by cutting costs and improving film and television content quality. That would boost subscriber growth.
Near-term Expectations
The deal will take between 12-18 months to close. WBD investors will get $23.25 in cash and $4.501 in Netflix shares.
Investors who held WBD stock since Q1/2022 are now at break-even levels if they sell the position today. Bottom fishers who bought the stock below $8.00 may wait until the deal closes.
