Trade Tracker: Josh Brown buys Warner Bros. Discovery

OK, we are back and we have some big committee moves to tell you about. We start with Josh Brown buying, as we said, a media name, one that’s been beaten down to say the least. WBD. What have I done? Brothers discovered this is probably a big mistake. I’m in here with the stop loss. This is not a table pounding by something about this situation tells me there’s almost nobody left to sell. And I kind of like those types of situations. So here are the risks. Company has $43 billion in debt. It’s unclear how they’re going to ever completely de lever. I don’t think they need to. I think if they can continue to cut that down at the rate they have been. I think the number was 53 billion in debt not long ago. So if they can continue to cut that down there could be a re rating here. The the other main risk, which I think is going to play out in the next month or so, they are deep in negotiations with the NBA about retaining that relationship. Obviously for TNT, super important, they may fail. There are other players offering huge money like the parent company, this network and they may not be able to meet the number. I don’t know what the reaction is on the street. I’m willing to tolerate that risk because I think what could go right here is really interesting. They brought James Gunn in to completely revamp the DC Comics cinematic universe. You’re talking about properties like Superman, Batman, which are definitely under earning relative to their potential. That’s not a a thing that might happen that’s already underway. Same kind of revamp for Lord of the Rings, same kind of revamp for Harry Potter. These are massive Disney sized properties that they have just been under earning on at the box office for a very long time #2 direct to consumer is getting better not worse. If you exclude the problem that we all know of with the linear network, that’s not going to get better, but that’s getting less, that’s getting worse at a slower pace. Now they’re making money though on the streaming platform and that’s going to start to become more important. They made $50 million last quarter, 90 million this quarter it’s 100 million users On on the Max app, they are now one of the largest apps. And yesterday they announced the partnership with Netflix, excuse me, with Disney Plus, Hulu that I think could be a precursor to much better activity, with bundles much more industry cooperation And those to me seem like more powerful catalysts than what could go wrong. So I think we’re we’re at a place where the reward outweighs the risk. We ask you this, does the outcome of the NBA rights negotiation have anything to do with how long you may stay in the stock? Do you want there to be an outcome as a shareholder of this company? Do you want them to spend whatever it takes or do you want them not to because of the heavy debt load that you already suggested and not suggested, but but said exists on the balance sheet, which I’m just saying is well known. I’m glad. I’m glad you asked that question. I’ve been thinking about exactly that for for the last week or two as I’ve been stalking the stock. One of the things that’s interesting is that today they announced they’re going to tender for 1.75 billion worth of debt. I don’t think that they would be doing that if they weren’t confident enough, confident enough in the cash flow outlook. They’ve got about 3 billion in change in cash on hand. So I think they’re confident enough in what the cash flows are going to be that they can play with the big dogs. They can put up a $2 billion number, for example, for the rights to NBA. They’ve had a relationship with basketball for 40 years. Think about that. They have the best show inside the NBA, like the best coverage of of basketball across all of the networks. I think they’re going to fight like hell to keep it. I could be wrong about that. And I think if they can keep it, the stock goes higher. If they lose it, I think there’s a negative reaction. But I think I get stopped out. I just hope they don’t announce it prior to the open. I hope I have an opportunity to get stopped out before there’s a big gap down. So this is not a table pounding by the faint of hearts should not follow me into this. Stocks on 52 week low lists for a reason. This one is down there for a reason. I’m just feeling better about what could go right. Everybody understands the negatives. You’re looking for a Brunson bounce? You gonna back me up on this one, or I? You like trembling? Yeah. This guy is PTSD. I’m just over here twitching. You have no idea. You bought more much. I want you. It’s the JC Penney of streamers. Don’t. I don’t know what What could go wrong? Come on. I thought we had a conversation before the show. I’m just kidding. I like that one.