Warner Bros. Discovery Well-Positioned to Pay Down Debt and Increase Value, Despite Near-Term Headwinds

WBD has favorable long-term debt structure - low cost, fixed rate, long maturity, no near-term refinancing risks. Debt is very manageable.
WBD has already reduced debt by $11 billion since merger closed. Plans to reduce further to meet 2.5-3.0x leverage target by end of 2024.
WBD generates strong free cash flow to pay down debt. Fair value of fixed rate debt much lower than book value.
WBD valuation very low compared to media peers based on EV/EBITDA. Share price should increase as fundamentals improve.
Near-term catalysts resolution of Disney/Charter dispute, end of strikes, approach of 2-year merger anniversary.

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9/6/2023

David Zaslav Says Charter-Disney Fight Feels Like “A Moment” As WBD CEO Talks Carriage Deals, CNN & Hollywood Strikes

Warner Bros. Discovery CEO David Zaslav believes that the current dispute between Charter and Disney could be a significant moment for the industry, as Charter seeks to pay less for Disney content and restructure agreements with all programming providers as contracts expire. Zaslav is focused on preparing for a linear meltdown and restructuring the company for the streaming era, with plans to relaunch Max, add live CNN news, and eventually include live sports. The ongoing Hollywood strikes have impacted the company's financial estimates, with a profit hit of up to $500 million but increased free cash flow expected.