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Investing.com -- Warner Bros Discovery’s streaming and studios unit could attract bidders once it splits from the company’s networks business in 2026, with Netflix the most compelling buyer, Wells Fargo said.
Brokerage lifted price target on the stock by $1 to $14, with a 30% probability to a sale of the unit.
Analysts value WBD’s content operations at about $65 billion, or over $21 a share in a bullish scenario.
“WBD’s Streaming & Studios could be an attractive M&A candidate, and our list of potential buyers implies a lofty valuation,” analysts at Wells Fargo said.
“We think Netflix is the most compelling buyer, and their investors would support a deal”
Wells Fargo listed Amazon, Apple, Comcast, Paramount’s parent company Sky, Netflix and Sony as potential acquirers but said regulatory hurdles could weigh on some of the larger tech players.
It added that Sky’s owners would face financing constraints and that a Sony bid would require a shift in strategy.
A Netflix acquisition would give the streaming giant access to WBD’s $12 billion annual content spend, a library worth $6.5 billion and a 100-acre studio lot.
It estimates that such a deal could deliver 18% earnings accretion by 2030 and push Netflix toward a $1 trillion market capitalization.
Wells Fargo’s blue-sky scenario assumed a 75% probability of a sale, which it said could lift WBD’s value above $20 a share.