Wall Street seems to love what Warner Bros. is selling. Discovery.
The combined media company started its first full day of trading on Monday in green. Warner Bros. shares soared. Discovery down nearly 6% Monday, about an hour after opening, with the bell at 9:30 a.m. ET at $24.08 a share.
AT&T, the telecom giant that offloaded WarnerMedia to Discovery after four turbulent years, also appears to have benefited. The company’s stock was up more than 5% at $19.30 Monday at 10:30 a.m. ET. AT&T stock opened at $18.89 per share.
Discovery completed its $43 billion merger with WarnerMedia on Friday. The combined companies boast a list of top entertainment brands that includes the Warner Bros. film studio. and HBO, TNT, and CNN as well as Food Network, HGTV, TLC, and Animal Planet. The hope is that the broader range of offerings will make the conglomerate more competitive with the likes of Netflix and Disney and will boost their streaming services.
But there are risks. To close the deal, Discovery amassed billions of dollars in debt. It hopes to identify about $3 billion in cost-effective synergies. This could potentially lead to layoffs.
David Zaslav, Discovery CEO and mastermind of the deal, will oversee both companies. He’s been looking to strip the company’s seams, bid farewell to WarnerMedia President Jason Keeler and Warner Bros. President. Ann Sarnoff last week while announcing a new leadership structure.
AT&T plans to use WarnerMedia’s proceeds to pay off the net debt, which stood at $156.2 billion at the end of 2021. The company needs more capital as it plans to invest more in 5G technology.
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