12 Best News and Digital Media Stocks To Buy

3. Warner Bros. Discovery, Inc. (NASDAQ:WBD)

Number of Hedge Fund Holders: 49

Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a global media and entertainment company that operates through the Studios, Networks, and DTC segments. The Studios segment manages the production and release of feature films, while the Networks segment encompasses its domestic and international television network. The company’s DTC segment primarily operates its premium pay-TV and streaming services.

Over the last two and a half years, the company has continued to make meaningful investments in new platforms and technologies, partnerships, and creative talent to drive changes in its structure and accelerate growth. Warner Bros. Discovery, Inc. (NASDAQ:WBD) is focusing on a three-pronged strategy to deliver expected shareholder gains. These include deploying Max, its streaming service, as a global storytelling and distribution platform, optimizing the company’s Networks business (including its US Linear Television business), and returning its studios to industry leadership.

The company added 7.2 million subscribers to Max in fiscal Q3 2024, bringing the total count to 110 million subscribers globally. It is also seeing growth in subscriber-related revenue growth and profitability growth for the segment.  Overall, the company’s DTC revenue grew 9% year-over-year to $2.6 billion, and EBITDA increased by more than 175% year-over-year to $290 million. The primary driver of this growth is the company’s content, which is increasingly resonating with consumers. Warner Bros. Discovery, Inc. (NASDAQ:WBD) ranks third on our list of the 12 best news and digital media stocks to buy.

Longleaf Partners mentioned Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q1 2024 investor letter. Here is what the fund said:

“Warner Bros Discovery (WBD) – Media conglomerate Warner Bros Discovery was also a detractor in the quarter. The market disliked the company’s lack of guidance for 2024. While there are tentative signs that the advertising market is slightly improving, we understand why the market remains in show-me mode on this part of the business. The Warner Bros Studio has gone from a big hit with the Barbie movie last summer to some misses lately. As we have discussed before, April 2024 represents the two-year anniversary of Warner Bros and Discovery merging. After this date, the company will have more options to go more on offense. Unfortunately, this is overlooked in the near term by daily Paramount headlines. We are ready to see how the rest of this year plays out. WBD still generates substantial FCF and is de-levering its balance sheet rapidly. The company remains dramatically undervalued today, but we need to see more positives before increasing our position further.”