Discovery shares surged on Friday as investors anticipated a massive $43 billion merger with AT&T's WarnerMedia, which cleared several regulatory hurdles and is expected to close in the next few months.
The merger could create a global media powerhouse according to Bank of America.
LightRocket via a photo by Rafael Henrique/SOPA Images.
The stock price of Discovery rose as both analysts and investors became more enthusiastic about the company's upcoming merger with AT&T's entertainment arm, WarnerMedia.
The $43 billion deal will combine famed brands such as CNN, Animal Planet and Food Network under a new publicly traded company called Warner Bros. Discovery.
The Warner-Discovery deal has recently cleared several antitrust hurdles, including regulatory approval from the European Commission and a favorable ruling from the Internal Revenue Service.
AT&T CEO John Stankey said at a Citi investor conference earlier this week that the WarnerMedia spin-off and merger with Discovery is moving according to plan, while also suggesting that the deal could close sooner than expected.
Analysts at Bank of America upgraded Discovery shares to a "BUY" rating on Friday, predicting that the upcoming merger will create a "global media powerhouse" and a large windfall for investors.
The firm is bullish on the new entity merging some of its best streaming assets and emerging as an established competitor to other streaming giants.
The $43 billion merger between AT&T and Discovery was announced in May of 2021. AT&T will spin off WarnerMedia and give operational control of the business to Discovery. David Zaslav will be the CEO of the new company. AT&T shareholders will own the lion's share of the company.
There is a big number.
Warner Bros. Discovery is predicted to have at least $3 billion in cost savings annually by the year 2023.
The quote is crucial.
Warner Bros. Discovery has the potential to be the most dynamic global media company, according to analysts from Bank of America. Discovery has a favorable risk/reward.
Despite the planned merger, AT&T and Discovery's shares have largely failed to gain traction. Since the announcement in May 2021, the shares are down.
