Rothschild Redburn adjusted its stance on Warner Bros. Discovery, moving the stock from Buy to Neutral and increasing its 12-month price target to $31.00 from $28.00. At the time of the update the share price was trading at $27.99, following strong returns of 170.7% over the past year and 136.2% over the prior six months, according to InvestingPro data.
The firm's revision reflects its view that Netflix is the most likely acquirer for Warner Bros. Discovery and that materially higher offers from Paramount are unlikely to materialize. Netflix has made a cash proposal of $27.75 per share to purchase the Warner Bros. studio assets and the HBO streaming business, a figure that sits just below WBD's then-current market price.
In its analysis Rothschild Redburn assigns a value of $2.80 per Warner Bros. Discovery share to the portion of the company that will remain as Discovery Global. Combining that figure with the Netflix bid produces a total implied value of $30.55 per WBD share. The firm’s assessment for Discovery Global assumes the unit will trade at a 4.5x EBITDA multiple in one year’s time.
Rothschild Redburn’s valuation choices reflect a judgment call on appropriate comparables. The firm noted Versant’s current 2026 EBITDA multiple of 4.2x as a starting point but opted to use a slightly higher 4.5x multiple for Discovery Global because Versant has faced technical selling pressure since its spin-out from Comcast. Rothschild Redburn described Versant as a small-cap, pure-play cable network company with no dividend that is media-focused, and indicated that Versant’s present multiple appears depressed by recent selling trends.
Rothschild Redburn’s Discovery Global valuation contrasts with InvestingPro’s Fair Value metrics, which suggest a different picture for WBD’s broader valuation. InvestingPro’s assessment indicates WBD may be overvalued by some measures, noting a price-to-earnings ratio of 144.3 and an enterprise value-to-EBITDA multiple of 12.7.
Separately, Warner Bros. Discovery continues to be the subject of competing interest and evolving discussions. Reports indicate the company is considering a renewed offer from Paramount Skydance, which could reopen sale conversations and prompt the board to evaluate whether Paramount’s terms could exceed the current Netflix arrangement. No board decision has been announced.
Paramount Skydance has sweetened its proposal with a so-called ticking fee of 25 cents per share for each quarter that a deal remains incomplete after this year. That mechanism could equate to roughly $650 million in cash each quarter beginning in 2027 if the fee were to be triggered.
Political and market scrutiny has also emerged. Senator Tim Scott has raised questions with the U.S. Securities and Exchange Commission regarding Warner Bros. Discovery’s disclosures tied to the Netflix transaction, suggesting potential inadequacies in the information provided. Industry negotiations elsewhere have been affected by the high-profile WBD situation; discussions between Sky and ITV over a potential $2.18 billion acquisition have slowed as attention shifts to the Warner Bros. Discovery developments.
Independent advisory commentary has weighed in as well. Raymond James observed that Paramount is gaining momentum in its pursuit of Warner Bros. Discovery but cautioned that Paramount may need to increase its offer to secure a deal.
Collectively, these threads underline a fluid and competitive landscape around Warner Bros. Discovery’s strategic options and valuation. Rothschild Redburn’s Neutral rating and $31 target reflect both the near-term bid dynamics and assumptions about the residual Discovery Global unit, while alternative valuation indicators point to potentially higher multiples underpinning the company’s current market price.