Discovery Shares Poised for Gains After Rough 2021
The media company was hit hard by the Archegos collapse, but there are reasons for optimism ahead of the pending merger with WarnerMedia.
Things are looking up for Discovery. CEO David Zaslav in 2020.
Photographer: Amanda Edwards/Getty Images
Entertainment companies with digital streaming ambitions had it rough in 2021 as subscriber growth slowed and investors started paying closer attention to the bottomless money pit that is video content creation. While big names from Walt Disney Co. to ViacomCBS Inc. underperformed the S&P 500 Index’s 27% gain last year, none suffered quite as much as Discovery Inc. The company, owner of cable channels such as HGTV and Animal Planet, launched streaming service Discovery+ last year, a few months before its proposed merger with AT&T’s WarnerMedia business was unveiled. The 22% drop in Discovery’s stock price in 2021 made it one of the bottom 10 performers of the S&P 500.
Disappointing subscriber numbers for the company’s nascent streaming service were part of the reason for the poor showing, but its shares were especially battered by investment fund Archegos Capital Management’s forced liquidation of its equity positions, which erased nearly half of Discovery’s market value.