Warner Bros Discovery Mulling Split To Boost Stock Price

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

WBD closed at $8.34, +0.34%, however, the company is down from its 52-week high of $14.76 with a $20.3 billion market cap. WBD CEO David Zaslav is apparently weighting myriad options from selling assets to separating the movie studio and Max streaming service into new company, free from the group 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 such as WBD is making another round of layoffs as Deadline told you first. In addition, longtime media analyst Jessica Reif Erlich today 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.

Realize this isn’t the same situation ala Paramount Global, whereby a suitor such as Sony could swoop in and absorb WBD in its entirety. Paramount Global has $14B in long-term debt, and $39B in WBD’s case 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 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 Shari Redstone and Bob Bakish last December as headlines hit that merger talks were abounding. That was never going to happen.

The notion of a 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’s problems are on par with that of major motion picture studios who’ve waded into launching very expensive streaming services. This coupled with the declining ad market, the aftermath of COVID and double 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, layoffs and in effort to pay down debt. In February shares declined 10% after the corp’s CFO Gunnar Wiedenfels said he wasn’t giving a free cash flow outlook for the year.