Key Takeaways
- Warner Bros. Discovery shares surged after the entertainment giant renewed its distribution deal with Charter Communications.
- The agreement increases the fees Charter will pay to carry certain Warner Bros. TV channels and maintains stable fees for TNT.
- Executives reportedly believe the deal could provide leverage as Warner Bros. Discovery negotiates renewals with other pay TV providers.
Warner Bros. Discovery (WBD) shares soared 10% on Wednesday, the top performance in the S&P 500, after the entertainment giant renewed its distribution deal with Charter Communications (CHTR), the nation’s largest pay TV company.
The companies inked the new deal a year before the expiration of their existing agreement. In an environment of cord-cutting and other shifts in the media landscape, securing distribution deals has become a pressing issue.
Breaking Down the New Agreement
The updated deal includes an increase in the fees Charter will pay to carry Warner Bros. Discovery channels, including cable-TV outlets CNN, TBS, and Food Network. As for TNT, the Warner Bros. Discovery property that recently lost its broadcast rights to the NBA, the fees are set to remain stable. Securing the Charter agreement without taking a significant pay cut for a basketball-free TNT appears to be a positive outcome for Warner Bros.
According to The Wall Street Journal, executives at Warner Bros. Discovery believe the Charter deal could provide leverage as the firm pursues distribution renewals with other pay TV players. Negotiations with Comcast (CMCSA) and DirecTV are on deck.
Stock Performance
Warner Bros. Discovery stock plunged in July following the company’s unsuccessful attempt to hold onto its NBA rights. Its performance has been volatile since: The stock remains in negative territory for 2024, down more than 30%.
Charter shares rose more than 3% Thursday, but are still down around 13% year to date.