Thursday saw the shares of Warner Bros. Discovery (WBD) surge by 10%, emerging as the top performer in the S&P 500. This hike followed a contract renewal with Charter Communications (CHTR), the largest pay TV company in the nation. WBD managed to secure this contract renewal a year ahead of their existing deal's expiration, a crucial achievement in a media landscape where cord-cutting is becoming increasingly common and distribution deals are highly sought after.
The renewed contract includes a rise in the fees that Charter will pay in order to host Warner Bros. Discovery channels. This encompasses cable-TV channels like CNN, TBS, and the Food Network. However, the fees for Warner Bros. Discovery's property TNT, which recently lost NBA broadcast rights, are slated to remain stable. Despite losing the NBA rights, maintaining the Charter agreement without taking a notable pay cut for TNT is viewed as a favorable outcome for WBD.
Executives at Warner Bros. Discovery see the Charter deal as a stepping stone for future distribution renewals with other pay TV entities, as reported by The Wall Street Journal. Talks with Comcast (CMCSA) and DirecTV are imminent.
The stock value of Warner Bros. Discovery dipped in July due to the company's failure to retain the NBA rights. Although the stock value has been unstable since, it is currently down by over 30% for 2024. On the other hand, Charter shares had a more than 3% rise on Thursday, despite being down around 13% since the start of the year.