Menu
A few years before AT&T (T) decided to spin-off its Warner Bros. division and merge it with Discovery to create Warner Bros. Discovery (WBD) in a tax efficient transaction called a Reverse Morris Trust transaction, Discovery was languishing as an attractive value stock without a catalyst. John Malone, who served on Discovery’s Board of Directors purchased $75 million worth of the stock in an insider purchase and said the following about the company in a CNBC interview,
“I believe that they will solve this issue and that they are dramatically undervalued right now. When I put my screen up and I look at companies based upon market cap versus levered free cash flow, they were the cheapest thing on the screen. And I said wait a minute, they are growing in a world where everyone else in shrinking, they own all their content, they are generating a ton of cash, they have an investment grade balance sheet, why are they, why are they cheap.”