Discovery: My Favorite Media Stock For The Next 5 Years

Summary

  • While possibly dead money for a year, Discovery is my favorite media name for the next five.
  • The combination of AT&T’s WarnerMedia and Discovery creates a streaming giant with more content than Netflix.
  • Malone is the Warren Buffett of the media world. The next decade at Discovery could be similar to what he did with Charter Communications (stock up 4.5x in 8 years).
  • With DISCK, we estimate $5 of downside, with $30+ of upside over the next 3-5 years.
  • I added shares last week, with plans to build a position over the next 6-12 months.
  • Looking for a portfolio of ideas like this one? Members of Cash Flow Compounders get exclusive access to our model portfolio. Learn More »

Cable TV selection of globally famous channels on keyboard
Drazen_/iStock Unreleased via Getty Images

Deal Review

AT&T (NYSE:T) and Discovery (DISCK) announced in May the largest media transaction seen in years. As most investors already know, AT&T will be merging its WarnerMedia (WM) assets with Discovery in a tax-free transaction.

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This article was written by

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Thomas Lott started as a portfolio manager at a hedge fund in 2003 and has worked as a financial professional for over 30 years. Thomas espouses Graham and Dodd/Buffett style investing, always on the lookout for high-quality equities at attractive valuations. He is a graduate of Vanderbilt University with an MBA from Northwestern's Kellogg School of Management.

Thomas leads the investing group Cash Flow Compounders where, along with NJ Value Investor, he aim to find the best companies in the world that are trading at attractive valuations. Features of Learn more include: their exclusive portfolio of compounders, 2-4 in-depth new ideas a month, live chat, and direct access for questions. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of T, DISCK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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