Warner Bros Discovery, the conglomerate that owns CNN and HBO, is considering a strategic move to separate its digital streaming and studio operations from its traditional TV networks, according to a report by the Financial Times on Thursday. This move aims to enhance the company's struggling stock price. Shares of the media behemoth surged by 6.5 percent in pre-market trading.
CEO David Zaslav is exploring various strategic options for the company, including the sale of assets or the creation of a new entity by spinning off the Warner Bros movie studio and the Max streaming service, as reported by the FT, citing sources close to the situation. The report also indicates that the majority of the group's debt, approximately $39 billion as of March 31, could stay with the pay-TV networks business if Warner Bros Discovery decides to split.
The company has not yet commented on a request for clarification from Reuters. The media industry has seen increased consolidation this year, as cable TV continues to lose subscribers to streaming services, and traditional media giants seek the scale necessary to compete with digital streaming leaders like Netflix. Paramount Global has recently agreed to merge with the streaming-era newcomer Skydance Media, a move that some analysts see as a shift of power from traditional media tycoons to tech billionaires, with David Ellison set to lead the merged entity.
Since the merger that formed Warner Bros Discovery in 2022, the company's shares have fallen by 65 percent, resulting in a market value of $20.39 billion. The stock saw a nearly eight percent increase on Tuesday following a statement from BofA Global Research analysts suggesting that options such as a break-up or sale of the company could generate more value for shareholders than maintaining the current structure. This could potentially impact Warner's debt negatively but would release value from its premium assets, according to the analysts. The FT report also mentions that the company has not yet engaged an investment bank to facilitate any specific transactions.
