Warner Bros. linear combination with Comcast ‘makes strategic sense,’ says BofA

After Warner Bros. Discovery (WBD) announced a new corporate structure under which it will now operate in the two distinct divisions of Global Linear Networks and Streaming and Studios, BofA analyst Jessica Reif Ehrlich said a “key tenet of our bullish thesis” has been predicated on the unique and valuable assets underpinning the company and views this announcement as “a positive first step toward realizing this value.” As the firm notes it has written recently, Warner Bros’ linear assets “would appear to be a very logical partner” for the newly announced Comcast (CMCSA) SpinCo. In a hypothetical scenario in which the streaming and studio asset were spun out, the remaining linear assets could then be merged in an all-equity transaction with Comcast SpinCo, the analyst contends, adding that it believes the company’s standalone streaming and studio assets would be “an attractive takeover target for multiple suiters.” BofA reiterates a Buy rating and $14 target on Warner Bros., which it continues to believe has “a compelling assortment of assets.”