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Can Warner Bros. Discovery's Rich Partner Base Push the Stock Higher?
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Warner Bros. Discovery’s (WBD - Free Report) rich partner base that includes Alphabet (GOOGL - Free Report) , Charter Communications (CHTR - Free Report) , Esports World Cup Foundation, SF Studios, Stan Sport and others, bodes well for its prospects.
Partnerships with these companies are helping WBD to offer solid content to its user base that eventually drives top-line growth.
For instance, in partnership with Alphabet’s Google Cloud, WBD announced the implementation of AI-powered captioning solution on Tuesday.
It recently inked a distribution agreement with Charter, the largest distributor of Pay-TV in the United States. WBD’s partnership with Soudah Development is expected to expand its footprint in Saudi Arabia.
WBD’s Caption AI to Aid Better Resource Utilization
Warner Bros. Discovery will integrate a captioning solution by using Google’s Vertix AI in Max video streaming platform and unscripted programs like sports and reality TV.
Max offers a diverse portfolio of entertainment series, including hits like Games of Thrones and The Last of Us. MAX is present in 65 international markets and can leverage the benefit of Caption AI to cater to diverse global viewers.
Caption AI is a significant implementation by WBD as it will make the captioning process less labor-intensive. This deployment will transform WBD’s ways of creating and projecting captions.
Caption AI will use generative AI to convert video content into text and will consistently refine and train the caption AI workflow to reduce errors and increase precision.
Warner Bros. Discovery expects caption AI to take 80% less time and 50% less cost than before once the solution is deployed. It will aid WBD to produce closed captions, given various accents and dialects represented on the vast content portfolio.
Charter Partnership Helps WBD Negate NBA Loss
Charter signed a pact with WBD to increase the overall fee that it pays to broadcast Warner Channels. In return, Charter customers will have access to WBD’s Max and Discovery+ streaming platforms for free.
WBD’s agreement with Charter is a strategic move undertaken by WBD to aid in reaching Charter’s 57 million customers. The deal is also expected to help it negate the loss of NBA partnership.
WBD expects to reach its EBITDA target of more than $1 billion for fiscal 2025 by increasing its customer base with the Charter Agreement, leading to subscriber revenue improvement, delivery of more personalized content and reduced expenses.
Can an Expanding Partner Base Aid WBD’s Prospects?
Warner Bros. Discovery shares have dipped 27% year to date, underperforming the broader Zacks Consumer Discretionary sector’s return of 3%.
WBD shares have also lagged the Zacks Broadcast Radio and Television industry and its peers Netflix (NFLX - Free Report) and Fox (FOXA).
Over the same time frame, shares of Netflix and Fox have gained 46.2% and 42.6%, respectively. The industry appreciated 26.5%.
WBD’s underperformance can be attributed to sluggishness in the linear advertising market and uncertainties related to sports and affiliate rights. In the first half of 2024, WBD revenues fell 7.1% year over year to $19.6 billion.
WBD is initiating significant restructuring reforms, including strategic content programming assessments and facility consolidation activities, to achieve cost-effectiveness. WBD expects these reforms to be completed by the end of fiscal 2024.
The expanding partner base is expected to boost WBD’s top-line growth and profitability in the long run.
WBD’s 2024 Estimates Trending Down
For 2024, the Zacks Consensus Estimate for revenues is pegged at $40.44 billion, indicating a year-over-year decline of 2.13%.
The consensus mark for 2024 loss is pegged at $4.47 per share, unchanged over the past 30 days. WBD reported a loss of $1.28 per share in 2023.
The Zacks Consensus Estimate for third-quarter 2024 loss is currently pegged at 3 cents per share, wider by a penny over the past 30 days.
The consensus mark for third-quarter 2024 revenues is pegged at $9.99 billion, indicating year-over-year growth of 0.14%.
WBD - To Buy, Hold or Sell?
WBD’s prospects benefit from strong direct-to-consumer business due to strong content. However, intense competition remains a concern.
WBD shares are undervalued, as suggested by a Value Score of B. However, muted growth prospect in the near term is a headwind for investors.
WBD currently has a Zacks Rank #3 (Hold), which implies that investors may want to wait for a more favorable entry point.
Image: Bigstock
Can Warner Bros. Discovery's Rich Partner Base Push the Stock Higher?
Warner Bros. Discovery’s (WBD - Free Report) rich partner base that includes Alphabet (GOOGL - Free Report) , Charter Communications (CHTR - Free Report) , Esports World Cup Foundation, SF Studios, Stan Sport and others, bodes well for its prospects.
Partnerships with these companies are helping WBD to offer solid content to its user base that eventually drives top-line growth.
For instance, in partnership with Alphabet’s Google Cloud, WBD announced the implementation of AI-powered captioning solution on Tuesday.
It recently inked a distribution agreement with Charter, the largest distributor of Pay-TV in the United States. WBD’s partnership with Soudah Development is expected to expand its footprint in Saudi Arabia.
Warner Bros. Discovery, Inc. Price and Consensus
Warner Bros. Discovery, Inc. price-consensus-chart | Warner Bros. Discovery, Inc. Quote
WBD’s Caption AI to Aid Better Resource Utilization
Warner Bros. Discovery will integrate a captioning solution by using Google’s Vertix AI in Max video streaming platform and unscripted programs like sports and reality TV.
Max offers a diverse portfolio of entertainment series, including hits like Games of Thrones and The Last of Us. MAX is present in 65 international markets and can leverage the benefit of Caption AI to cater to diverse global viewers.
Caption AI is a significant implementation by WBD as it will make the captioning process less labor-intensive. This deployment will transform WBD’s ways of creating and projecting captions.
Caption AI will use generative AI to convert video content into text and will consistently refine and train the caption AI workflow to reduce errors and increase precision.
Warner Bros. Discovery expects caption AI to take 80% less time and 50% less cost than before once the solution is deployed. It will aid WBD to produce closed captions, given various accents and dialects represented on the vast content portfolio.
Charter Partnership Helps WBD Negate NBA Loss
Charter signed a pact with WBD to increase the overall fee that it pays to broadcast Warner Channels. In return, Charter customers will have access to WBD’s Max and Discovery+ streaming platforms for free.
WBD’s agreement with Charter is a strategic move undertaken by WBD to aid in reaching Charter’s 57 million customers. The deal is also expected to help it negate the loss of NBA partnership.
WBD expects to reach its EBITDA target of more than $1 billion for fiscal 2025 by increasing its customer base with the Charter Agreement, leading to subscriber revenue improvement, delivery of more personalized content and reduced expenses.
Can an Expanding Partner Base Aid WBD’s Prospects?
Warner Bros. Discovery shares have dipped 27% year to date, underperforming the broader Zacks Consumer Discretionary sector’s return of 3%.
WBD shares have also lagged the Zacks Broadcast Radio and Television industry and its peers Netflix (NFLX - Free Report) and Fox (FOXA).
Over the same time frame, shares of Netflix and Fox have gained 46.2% and 42.6%, respectively. The industry appreciated 26.5%.
WBD’s underperformance can be attributed to sluggishness in the linear advertising market and uncertainties related to sports and affiliate rights. In the first half of 2024, WBD revenues fell 7.1% year over year to $19.6 billion.
WBD is initiating significant restructuring reforms, including strategic content programming assessments and facility consolidation activities, to achieve cost-effectiveness. WBD expects these reforms to be completed by the end of fiscal 2024.
The expanding partner base is expected to boost WBD’s top-line growth and profitability in the long run.
WBD’s 2024 Estimates Trending Down
For 2024, the Zacks Consensus Estimate for revenues is pegged at $40.44 billion, indicating a year-over-year decline of 2.13%.
The consensus mark for 2024 loss is pegged at $4.47 per share, unchanged over the past 30 days. WBD reported a loss of $1.28 per share in 2023.
The Zacks Consensus Estimate for third-quarter 2024 loss is currently pegged at 3 cents per share, wider by a penny over the past 30 days.
The consensus mark for third-quarter 2024 revenues is pegged at $9.99 billion, indicating year-over-year growth of 0.14%.
WBD - To Buy, Hold or Sell?
WBD’s prospects benefit from strong direct-to-consumer business due to strong content. However, intense competition remains a concern.
WBD shares are undervalued, as suggested by a Value Score of B. However, muted growth prospect in the near term is a headwind for investors.
WBD currently has a Zacks Rank #3 (Hold), which implies that investors may want to wait for a more favorable entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.