Seaport downgrades Warner Bros Discovery as merger delay clouds upside

Investing.com -- Seaport Research Partners downgraded Warner Bros Discovery to Neutral from Buy, arguing that a prolonged delay to its proposed acquisition by Paramount Skydance reduces the attractiveness of the stock despite potential upside if the transaction is ultimately completed.

The downgrade follows Paramount Skydance's decision to put the acquisition on hold until as late as June 1, 2027, as it seeks to address legal challenges from the Writers Guild and several U.S. state attorneys general. Seaport said the added uncertainty and longer wait for deal completion make other investment opportunities more compelling, even though the transaction still offers roughly 20% upside to the agreed cash consideration before ticking fees are included.

The brokerage noted that while delaying the merger may avoid near-term injunction risks, it also postpones integration efforts and the realization of expected synergies. It said investors are now likely to face an extended period before receiving meaningful updates on the legal process or deal timeline.

Separately, Seaport lowered its financial forecasts for Warner Bros Discovery, citing the weaker-than-expected performance of Supergirl, which generated only about $124 million at the global box office and failed to cover production costs, let alone marketing expenses. The firm also pointed to a softer advertising backdrop for the company this summer, with the absence of major sports programming such as the FIFA World Cup, NBA and NHL Stanley Cup games weighing on advertising demand.

Reflecting those concerns, Seaport cut its second-quarter 2026 revenue estimate by $236 million to $9.07 billion and reduced adjusted EBITDA by $219 million to $1.83 billion.

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