Brew Markets, October 21, 2025

Episode: Warner Bros. Discovery For Sale & Coke and GM Earnings Insights
Host: Ann Berry

Episode Overview

Ann Berry and co-hosts break down a pivotal day in market news, covering mega-mergers in beauty and healthcare, Warner Bros. Discovery’s surprise decision to explore a sale, and fresh earnings insights from consumer staples and industry giants like Coca-Cola, General Motors, Philip Morris, and GE Aerospace. The episode contextualizes how shifting corporate strategies ripple through markets, what’s fueling M&A activity, and the changing behaviors of both boards and consumers.

Key Discussion Points & Insights

1. Blockbuster Beauty Deal: Kering Sells Beauty Unit to L'Oréal

[00:31 – 04:26]

• Deal Details: French luxury giant Kering (parent to Gucci, Alexander McQueen) is selling its beauty division to L'Oréal for ~€4 billion ($4.6 billion). This dwarfs E.L.F. Beauty’s $1 billion buyout of Rhode Skincare in August.

• Rationale:

  • Kering faces pressure as couture sales drop, with a 15% YoY Q2 decline and €14 billion in debt.
  • New CEO Luca de Meo pivots back to focusing on fashion and accessories, moving rapidly to shore up cash and simplify operations.
  • Kering not only sells its luxury fragrance brand Creed but also grants L'Oréal 50-year exclusive licenses to produce fragrance and beauty items for Gucci, Bottega Veneta, and Balenciaga.
    • “The way licensing agreements are usually structured, the brand name owner gets a stream of royalties … a very high margin income stream for Kering.” (Ann Berry, [02:19])

• Market Reaction:

  • Kering’s market cap sits at ~$46 billion, rising 5% on the deal. L'Oréal ($285B market cap) rises similarly.
  • The two will also jointly explore the “wellness and longevity” sector, with details pending.

• Broader Trend:

  • The deal exemplifies how conglomerates seek operational focus and capital returns via divestitures and long-term licensing, favoring high-margin royalty streams over capital-intensive operations.

2. Warner Bros. Discovery Considering Sale or Breakup

[04:41 – 12:57]

• Announcement: Warner Bros. Discovery’s board says it will “consider a broad range of strategic options”—market code for being open for bids or restructuring.

• Company Overview & History:

  • Warner Bros. Discovery controls a vast IP catalog (Harry Potter, DC Comics, Friends) and assets like HBO Max, CNN, and HGTV.
  • Decades of mergers, spinoffs, and reinventions: absorbed Turner Broadcasting, merged with AOL, acquired by AT&T, spun out and joined Discovery in 2022.

• Structural Challenges:

  • The company is split between declining cable networks and content/streaming assets.
  • Ongoing industry trend: splitting fast-growth assets from slow-growth “cash cows,” a model pursued recently by Comcast/NBCUniversal (spinning off cable into Versant).

• Sale Scenarios:

  • Board’s move follows rebuffed offers (notably, $20/share from Paramount’s David Ellison), and regulatory duty requires boards to review all reasonable buyout options for shareholders.
  • Possibilities:
    • Corporate split (content vs. cable) by 2026
    • Full-company sale
    • Piecemeal asset deals (e.g., separate sales of Warner Bros. and Discovery assets)
  • “All bets are on is what they're basically saying now.” (Ann Berry, [09:03])

• Potential Suitors:

  • Comcast and Netflix reportedly making inquiries. For Netflix, owning Warner’s IP (e.g., "Friends," previously licensed for hundreds of millions) would consolidate streaming leadership.
    • “Just like go big or go home, just go buy it.” (Ann Berry, [10:32])
  • Apple considered an outsider possibility—its streaming lags, and an acquisition could infuse fresh IP and innovation.
    • “There are some sort of outside perspectives here saying perhaps this is one of the acquisitions that Apple would consider.” (Ann Berry, [11:13])

• Financials & Market Reaction:

  • WBD: ~$50B market cap + $35B in debt (~$85B enterprise value)
  • Shares up over 10% on the news; speculation boosts valuations for similar companies

• CEO Strategy:

  • CEO David Zaslav advocates splitting assets to command higher multiples for premium (“growth”) businesses.
  • He recently said, “Quality, we think that gives us a chance to raise prices” ([11:34])—signaled by HBO’s $1/month price hike.

3. Earnings Highlights: GM, Philip Morris, Coca-Cola, GE Aerospace

[14:05 – 18:56]

a. General Motors (GM)

• [14:05 – 16:30]
• Stock jumps 15% after revenue/earnings beats and upside guidance for 2025.
• CEO Mary Barra credits the Trump administration for extending the tariff offset program through 2030, aiding U.S. auto competitiveness.
  • "I also want to thank the president and his team for the important tariff updates they made on Friday." (Mary Barra, [15:06])
• US market share at a post-2017 high; China back in profit.
• GM is scrapping its “BrightDrop” electric delivery van efforts after losing EV tax credits, taking a $1.6B write-down.

b. Philip Morris

• [16:30 – 17:18]
• Beats Q3 estimates; “smoke-free” products (Zyn nicotine pouches, IQOS heated tobacco) now 41% of revenue, aiming for 67% by 2030.
  • “The smokeless segment accounted for 41% of Philip Morris's total revenue for the quarter. … On the front page of today's investor presentation, the subtitle was Championing a Smoke Free World.” (John, [16:45])
• Shares down >7% despite results; guidance increase underwhelmed investors.

c. Coca-Cola

• [17:59 – 18:40]
• Outperformed expectations; stock up 4% as it holds to 5–6% organic revenue growth.
• Signals about the U.S. consumer: premium brands (Fairlife, Smartwater) are thriving with affluent customers, while Coke introduces lower-priced, smaller cans to appeal to cost-conscious shoppers.
  • “In contrast, the core Coca Cola brand plans to offer mini 7 and a half ounce single serve cans priced at below $2 to target lower income consumers. … Now we see these companies leaning into smaller packaging to try to appeal again to those who've been squeezed.” (Ann Berry, [18:07 & 18:28])

d. GE Aerospace

• [18:40 – 18:56]
• Revenue up 26% to $11B, aided by strong demand from Boeing and Airbus.
• Company is now a standalone aerospace business after spinning off healthcare (2023) and energy (2024) branches.
• Shares up nearly 5% before paring gains.

4. Other Major Moves:

[18:56 – 21:46]

• Gold Price Plunge:

  • Gold futures tumbled 5% (worst drop since 2013) after recently hitting record highs.
    • "It's extraordinary that the 5% ish, you know, coming down of gold after the rise it's had." (Ann Berry, [20:18])

• Healthcare Take-Private:

  • Blackstone & TPG acquiring Hologic (women’s health tech) for $18B, with $12B in debt financing—a sign of private equity’s renewed vigor amid falling rates.
  • Sovereign funds (Singapore GIC, Abu Dhabi) join in, echoing the trend of foreign money in U.S. take-privates (cf. $55B Electronic Arts deal).

• Late-breaking AI news:

  • OpenAI launches its “Atlas” browser. Ann Berry teases a review in the next episode, with implications for Alphabet’s stock.

Notable Quotes & Memorable Moments

• On Mega-Deals:

  • “This is just the first of a bunch of megadeals we're going to be covering.” (Ann Berry, [03:45])

• On Warner Bros. Discovery’s Potential Sale:

  • “It's a major moment for one of Hollywood's most storied studios and a sign of just how dramatically the media landscape is shifting.” (Ann Berry, [05:03])
  • “You owe it to the shareholders. So sometimes these unsolicited offers or approaches can set in motion a whole bunch of unintended consequences…” (Ann Berry, [09:19])

• On Apple as a Buyer:

  • "There are some sort of outside perspectives here saying perhaps this is one of the acquisitions that Apple would consider." (Ann Berry, [11:13])

• On the Market Mood:

  • “Just goes to show how the market is just, you know, short, short term memory in some regards and constantly looking for positive news at this moment in time.” (Ann Berry, [15:54])

Timestamps for Key Segments

• Kering/L'Oréal Mega-Deal: 00:31 – 04:26
• Warner Bros. Discovery Sale Overview: 04:41 – 12:57
• GM Earnings & Tariff Insights: 14:05 – 16:30
• Philip Morris Earnings: 16:30 – 17:18
• Coca-Cola Consumer Insights: 17:59 – 18:40
• GE Aerospace & Industry Spinoffs: 18:40 – 18:56
• Market Closes, Gold, and Healthcare PE Deal: 20:00 – 21:46
• OpenAI Atlas Browser Launch Mention: 21:32 – 21:46

Final Thoughts

This episode provided a comprehensive snapshot of evolving strategies in both legacy and high-growth industries, spotlighting how companies—whether luxury fashion houses, legacy studios, or blue-chip manufacturers—are adapting to volatile consumer and investor expectations. With waves of M&A, board-level maneuvers, and consumer shifts, Brew Markets stays attuned to what matters from Wall Street to Main Street.

“We're going to keep covering this growing trend, sovereign wealth funds, foreign investment in the U.S. and of course, more hot earnings.” (Ann Berry, [21:30])