A small independent studio caused a big surprise at the 95th Academy Awards. The US production company A24 Films won nine of the coveted gold trophies. Seven of them went to "Everything Everywhere All at Once" - among others, the science fiction adventure was named "Best Film". Two more Oscars went to the A24 drama "The Whale." Although the young company from New York pretty much outshone the competition with this, the traditional Hollywood majors were also allowed to enjoy the spotlight on Oscar night. So the event took time to wish Warner Bros. a happy birthday. April 4 marks the 100th anniversary of the legendary studio's founding. Warner Bros. has made and released some 12,500 films. These include many legendary blockbusters, such as "Casablanca," "Batman," "The Lord of the Rings" and "Harry Potter."
On the stock market, the movie company script is being rewritten right now. In April 2022, U.S. telecom giant AT&T spun off WarnerMedia to merge the division with Discovery. In this way, a global entertainment giant has been created. For 2022, Warner Bros. Discovery posted revenues of USD 33.8 billion. The majority of this was attributable to the "Networks" segment, which operates 30 TV stations in the U.S. alone. Internationally, the division operates, for example, the news channel CNN or Eurosport. The second largest business segment is "Studios" for the production of films, series and TV formats. Warner Bros. Discovery also operates the Direct-to-Consumer segment, or "DTC" for short. This includes streaming services such as HBO Max or Discovery+, as well as classic pay TV channels, first and foremost HBO. Despite its immense wealth, the company quickly experienced a "movie bust" on the stock market. From April 11 - the date on which the newly formed Warner Bros. Discovery was traded for the first time - the stock plummeted by around 60% by the end of 2022.
In the new year, the Nasdaq stock made a remarkable comeback. Since New Year's Eve, Warner Bros. Discovery is up close to 50%. CEO David Zaslav has backed the rally with plenty of optimism. According to him, most of the restructuring has been done. The costs incurred in the process left the group with a loss of USD 2.1 billion in the fourth quarter of 2022. "This year, we are focused on building and growing our business for the future," Zaslav said in presenting the figures. The start, he said, has been great. Among other things, the CEO referred to the success of the HBO series "The Last of Us," record sales of the video game "Hogwarts Legacy" or the plans of DC Studios. The franchise had announced ten new film and TV projects in January. "This is one of our biggest opportunities for value creation," enthused David Zaslav. Despite the big ambitions, management is keeping capital discipline high. Since last April, USD 7 billion in debt has been repaid. CFO Gunnar Wiedenfels also sees the company on track to realize USD 4 billion in cost savings by 2024.
What is certain is that Warner Bros. Discovery's stock is very volatile. Year to date, the realized volatility is more than 50%. By comparison, the Nasdaq Composite Index shows a value of just under 22% here. The high volatility makes the media stock a real "coupon giant". Leonteq has therefore launched two Softcallable Barrier Reverse Convertibles on Warner Bros. Discovery. In the product currency USD, the new issue brings a guaranteed payout of 18% p.a.. In CHF, the coupon amounts to 14% p.a.. The barrier is 59% of the initial fixing in each case. As long as the underlying does not fall to or below this level, the maximum return is fixed. If the cushion is not sufficient, the partial protection expires. Then the investment would be directly linked to the progress of Warner Bros. Discovery. Please also note the soft callable feature. Leonteq can call the BRC for the first time after six months and then quarterly. If the issuer makes use of this option, investors would receive the full nominal and the pro-rata coupon.
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