Warner Bros Discovery (WBD, Financial) –Media conglomerate Warner Bros Discovery (WBD) wasthe top contributor in the quarter. WBD was a top detractor last year in the face of concerns over management’s ability to effectively merge two businesses with different cultures, high leverage and exposure to cord cutting. In 2023, a solid plan is emerging for the integration of the businesses. This management team has a strong track record of integrating assets and growing free cash flow (FCF) per share, which is beginning to happen at WBD. Management has guided that the company will likely be below 4 times net debt to EBITDA by the end of 2023 and to 3x or less by the end of 2024, taking WBD out of the penalty box. We have seen this management team successfully execute this playbook before when Discovery bought former Southeastern holding Scripps in 2017. We are also finally beginning to see industry price rationality across the streaming world.
From Mason Hawkins (Trades, Portfolio)' Longleaf Partners Fund first-quarter 2023 commentary.
