“Real Threats” May Still Hit Warner Bros. Discovery (NASDAQ:WBD) Sale

Paramount Skydance’s PSKY -2.49% ▼ move to buy entertainment giant Warner Bros. Discovery WBD +0.14% ▲ is widely expected to be easier to get through the various layers of regulators than the deal between Warner and Netflix NFLX +0.50% ▲ would have been. But easier does not mean painless, and reports suggest there may still be threats to overcome in the meantime. Investors, meanwhile, are taking the idea in stride, and Warner shares notched up fractionally in the closing minutes of Thursday’s trading.

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Indeed, the Warner / Paramount deal is likely to be a comparatively simple matter. Early reports noted that Paramount has been “…engaging with regulators around the world and the combination does not come close to hitting any of the metrics that would be problematic.”

Despite this, there are some potential problems afoot. The United States Senate, particularly Democrats, have already expressed “outrage” over the deal. While the Senate cannot stop the deal itself, it can raise trouble in other ways, particularly if state attorneys general get involved. That could send the deal to a court, which could stop it from there. The same is true for regulators in Europe and the United Kingdom, though reports suggest that the deal will largely pass by quietly as no one has an interest in antagonizing President Trump unnecessarily.

News Blues

One other issue threatens to raise some trouble, though, as Paramount will now have two major news operations under its umbrella. Namely, Paramount will now control CBS and CNN, and that means significant redundancy that will likely see paring back.

CNN is already telling employees to avoid “…jumping to conclusions about the future.” But between the fact that CNN is already on thin ice with the Trump administration and in open decline in terms of ratings as it is—one report noted that CNN has lost over 40% of its day and primetime audience over the course of 2017 to 2025—the cuts, if they do come, are likely to come from CNN.

Is WBD Stock a Good Buy?

Turning to Wall Street, analysts have a Hold consensus rating on WBD stock based on one Buy, 12 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 161.21% rally in its share price over the past year, the average WBD price target of $29.55 per share implies 5.63% upside potential.

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