雅虎香港財經 Warner Bros. Discovery rallies as Licht's CNN exit prompts questions of a sale
Warner Bros. Discovery stock (WBD) surged another 7% on Thursday, topping the S&P 500 gainers, as the departure of CNN chief Chris Licht prompts renewed M&A speculation surrounding the embattled network.
CNN, although likely to benefit from the upcoming election cycle, has faced longer-term challenges as more consumers cut the cord, in addition to an unclear strategy following the quick demise of its streaming venture, CNN+.
Billionaire John Catsimatidis, owner and CEO of Manhattan-based grocery store chain Gristedes Foods, expressed his interest in purchasing the entity on Thursday. In an interview with the New York Post, he said he'd "go run the place tomorrow morning, and all I’d want is $1 per year."
Warner Bros. Discovery declined to comment on M&A speculation.
According to the New York Times, CNN brought in roughly $750 million in profit last year, down from the $1.25 billion it brought in the previous year. The network is estimated to generate $1.75 billion in operating revenue in 2023, representing roughly 4% of Warner Bros. Discovery's total revenue.
Geetha Ranganathan, senior media analyst at Bloomberg Intelligence, estimated the network could fetch up to $5 billion for its parent company. The analyst applied a 6.5x multiple to CNN's $750 million in EBITDA to come up with that $5 billion valuation.
Still, the network has been on a serious ratings decline, which could muddle the possibility of a sale in the near term.
According to Nielsen, CNN's ratings for May were down 25% compared with the year-ago period — despite a high-profile town hall with former president Donald Trump. Just two days after the town hall, the network's primetime viewership numbers fell, dropping it to fourth place below right-wing media outlet Newsmax, a much smaller network.
To compare, MSNBC saw ratings increase 14% in May year-over-year, while Fox News dropped 37% over that same time period.
Despite the slowdown in network news amid greater declines in linear TV viewership, Needham analyst Laura Martin said CNN is still a prime entity for Warner Bros. Discovery.
"The only way to win the streaming wars is you must have entertainment content, you must have news, and you must have live sports. Why? Because the way you drive viewership is when something breaks in the world for news, it drives people to your app, and then you have the option to keep them there with your entertainment content," she explained.
Zaslav, who told employees at a town hall last year that the company, including its divisions, was not for sale, has consistently reiterated his commitment to CNN. He told investors during WBD's most recent earnings call in May he anticipates "real growth" out of the network as the political cycle kicks off.
He reiterated those comments at a MoffettNathanson conference later that month, saying, "CNN should be the place that people come for the best version of the truth and for journalism. And that's what we're building."
"It's going to take some time, but advertisers are interested in CNN again," he continued.
In addition to the CNN news, shares also spiked after The Wall Street Journal reported Amazon (AMZN) is planning an ad-supported tier for Prime Video and holding discussions with Warner Bros. Discovery and Paramount Global (PARA) about adding the ad-based tiers of their streaming services through Prime Video Channels.
Warner Bros. Discovery stock is up nearly 50% year-to-date, thanks to its recent rally.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
