The Financial Times reported on a potentially major development at Warner Bros. Discovery, indicating that its CEO David Zaslav has begun to consider a breakup of the media giant. According to the report, WBD’s movie and streaming divisions could be separated from its cable assets. The goal for this action would be to boost the company’s sagging stock price, which has fallen by two-thirds since the high-profile merger between Discovery and Warner Bros. in April 2022.
Since that time, the combined company has struggled under billions in outstanding debt ($39 billion currently) and a terminal decline in the value of its cable assets. Its streaming business Max is also straining to stem losses, amidst intense competition from rivals including Netflix, Disney, Amazon, Apple, and YouTube. Under this pressure, WBD announced plans to eliminate an additional 1,000 positions.
Under the plan, which is in the earliest stages of development, the media conglomerate would spin off its television business together with most of its current debt. Unburdened in this way, the remaining WBD would be better able to invest in its streaming division and experience a rebound in its stock price.
However, the financial maneuver could spark a revolt by current bond holders, similar to the events which unfolded at Lionsgate when it calved off its Starz television division. Despite this risk, the company may be forced into making difficult decisions in order to set itself on a course for future success.