Warner Bros Discovery (NASDAQ:WBD) shares gained on Monday, following media reports that ousted CEO Jeff Zucker is a potential buyer of the media franchise.
Benchmark analysts weighed in on the sale rumors, saying that the deal talk “at least highlights chronic undervaluation” he sees in the WBD stock.
Still, the analysts believe the sale would be “problematical from political and regulatory perspectives if the transaction was largely funded by funds from the UAE.”
“Any foreign bid for CNN would certainly necessitate an extended CFIUS review especially as more than 25% would likely be directly or indirectly funded (via UAE involvement in Zucker’s RedBird IMI investment fund) by the UAE – with RedBird having formalized plans for a JV with Abu Dhabi’s International Media Investments,” they said in a note.
The analysts also noted that the Warner Bros. studio “is even more discounted in WBD’s stock price.”
WBD shares are down 0.5% in pre-open Wednesday.