Warner Bros. restructure indicates higher merger likelihood, says Barclays

Barclays keeps an Equal Weight rating on Warner Bros. Discovery (WBD) with a $10 price target after the company announced a new corporate structure which will regroup assets into two divisions, Global Linear Networks and Streaming and Studios. The firm finds it “tough to believe that the structure was created without an intent to consider a hard break between these assets in some form.” This likely explains the stock rally today post the news, the analyst tells investors in a research note. Barclays continues to believe the Comcast’s (CMCSA) NBC Universal and Warner Bros.’ assets are highly complementary. A combination of these assets could not only generate synergies and buy time to deal with structural issues, but also help both companies pivot towards streaming and emerge as one of the major content service providers long term, the firm contends.