Why This 1 Stock Is a Better Bet Than Discovery Ahead of Its Merger
The stock market bid down shares of television and media giant Discovery (NASDAQ: DISCA) (NASDAQ: DISCK) by almost 5% following its Tuesday, Aug. 3 second quarter (Q2) earnings report, despite the company beating Wall Street consensus at both the top and bottom line. The market apparently registered disappointment in Discovery's lackluster streaming subscriber growth, sidelining its financial performance.
The downturn might be viewed as a buying opportunity, but with a merger pending, there's also the question of whether Discovery or its merger partner AT&T (NYSE: T) will add more spark to your portfolio in the interim. Some indicators point to AT&T being the better deal before the combined company created from the melding of Discovery and AT&T's subsidiary WarnerMedia arrives next year.
AT&T and Discovery are involved in a major deal intended to transform the operations of both companies. AT&T is spinning off its subsidiary WarnerMedia, which will merge with Discovery to form a new company. Closing in mid-2022, the deal will create an as-yet unnamed new business entity. AT&T will benefit by spinning off a media subsidiary outside its normal wheelhouse, enabling fresh focus on its competitive strengths, while Discovery stands to gain a huge library of content to boost its stagnating fortunes, which will likely open a new chapter of growth and success.
Source Fool.com
