Anyone who has ever wished for a DVD or streaming release of their favorite show, but cannot find it due to music rights clearances knows the impact that music has on television and film. Warner Bros Discovery (WBD) recently asserted that value itself by setting up a new joint venture on ownership and handling of said music. The move did Warner shares little good, as it was down nearly 3% in Monday afternoon’s trading.
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Warner got together with Cutting Edge Group, a rights firm, that will reportedly co-own the musical catalog of Warner properties, including both television and film titles. Warner will hold onto “creative and operational control” over the rights, while Cutting Edge Group will “jointly manage” the operation, reports note.
There is no word on the specific finances involved in the deal, though it was called “one of the largest music deals ever transacted.” Whether that is in terms of cash involved, or just in the sheer number and popularity of the music involved—the Warner portfolio extends back over a century, after all—is unclear. The hope is to use this new arrangement to expand the portfolio’s listener reach and find “…new and exciting ways to entertain a new generation of fans.”
Tariff Troubles
While the threatened Trump tariffs have taken hold—though they have already been delayed in Mexico’s case—new reports suggest that the recent box office recovery may be under threat as a result of the new tariffs. This potential impact would work in two directions.
One, it might increase production costs. A lot of film is shot in Canada, thanks to tax credits. With the tariffs, those credits might evaporate, or costs might increase so much that the credits lose their impact. Beyond that, there is the issue of knock-on effects. People who pay more for, say, groceries or the like may lose the ability to spend some cash on the latest movie. That would hurt box office take, and thus, reduce profitability.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on nine Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 0.7% rally in its share price over the past year, the average WBD price target of $12.43 per share implies 22.95% upside potential.
