Warner Bros. Discovery Downgraded by Seaport on Merger Delay, Weaker Outlook

Seaport Research Partners has downgraded Warner Bros. Discovery (NASDAQ: WBD) to Neutral from a Buy rating, citing increased uncertainty surrounding the timeline for its proposed acquisition by Paramount Skydance. The brokerage noted that the prolonged delay diminishes the stock's near-term appeal for investors.

Merger Delay Clouds Upside

The primary driver for the downgrade is Paramount Skydance's decision to postpone the acquisition until as late as June 1, 2027. According to Seaport, this delay, intended to address legal challenges from the Writers Guild and several U.S. state attorneys general, introduces a long period of uncertainty for shareholders.

While Seaport acknowledged that the deal still offers a potential upside of roughly 20% to the agreed cash consideration, the extended timeline makes other investment opportunities more compelling. The firm stated that the delay also postpones critical integration efforts and the realization of expected cost savings, or synergies, from the merger.

Financial Forecasts Trimmed

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Compounding the merger concerns, Seaport also lowered its financial estimates for Warner Bros. Discovery, pointing to recent underperformance and a challenging advertising environment. The firm highlighted two key factors for the revised forecast:

• Box Office Disappointment: The film *Supergirl* generated only about $124 million at the global box office, a figure Seaport noted was insufficient to cover production costs, let alone marketing expenses.
• Soft Ad Market: A softer advertising backdrop is expected for the summer, partly due to the absence of major sports programming like the FIFA World Cup and the NBA and NHL playoffs.

Reflecting these headwinds, Seaport reduced its second-quarter 2026 revenue estimate for the company by $236 million to $9.07 billion. The firm also cut its adjusted EBITDA forecast by $219 million to $1.83 billion for the same period.