Warner Bros Discovery Mulling Split To Boost Stock Price

Anthony D'Alessandro
3-min read

Warner Bros Discovery is reportedly looking to break off its streaming and studio businesses from its linear networks to energize its falling stock price.

WBD stock closed Wednesday at $8.34, +0.34%, but the media company is down from its 52-week high of $14.76 and currently has a $20.3 billion market cap.

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WBD CEO David Zaslav is apparently weighing myriad option,s from selling assets to separating the movie studio and Max streaming service into a new company, free from the group’s current near-$40 billion debt. This is all per the Financial Times tonight. Deadline has reached out to Warner Bros Discovery for comment. We’ll update when they weigh in.

The news hits as WBD is making another round of layoffs, as Deadline reported first. In addition, longtime media analyst Jessica Reif Erlich two days ago begged WBD to do something — anything — from selling the company, to selling assets, to finding a streaming joint venture or merger. “In our view, the current composition as a consolidated public company is not working,” the BofA Global Research analyst said.

WBD’s situation isn’t the same as Paramount Global, whereby a suitor such as Sony or Skydance Media could swoop in and absorb WBD in its entirety. Paramount Global has $14B in long-term debt; WBD’s $39 billion load is a whole different ball of wax. No sound corporation wants to get into business with that. However, bits and pieces picked up by the right media company could work.

Per reports, WBD hasn’t hired an investment bank to explore such a transaction but has been speaking with consultants to figure out what’s best for shareholders. John Malone and the Newhouse family are WBD’s biggest investors. There’s also a path whereby WBD could opt to just stay the course as is.

WBD at one point sat down with then-Paramount Global CEO Bob Bakish last December as headlines hit about merger talks. That marriage was never going to happen.

The notion of a WBD split could see debt stay with linear networks, while the growing OTT service could hit a higher valuation multiple and be given the potential to invest in its growth, per FT. WBD is among the major motion picture studios who’ve committed to launching expensive streaming services, with all the attendant technology headaches, content costs, talent issues and brand repositioning that entails.

Compounding problems are a declining ad market as well as the aftermath of Covid and last year’s double Hollywood strikes. Warners has had a sour summer at the box office with a string of flops including Furiosa, Horizon: An American Saga – Chapter One and The Watchers. That said, they had a rich spring with Legendary’s Dune: Part Two and Godzilla x Kong: The New Empire.

The Zaslav era of WBD has seen a tremendous amount of cuts and layoffs in an effort to pay down debt. In February, shares declined 10% after company CFO Gunnar Wiedenfels said he wasn’t giving a free cash flow outlook for the year.

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