The stock price has fallen by nearly 70%, Warner Bros. Discovery Channel is still unwilling to split its business
Warner Bros. Discovery's leadership is unwilling to spin off its traditional television network from its streaming and movie studio businesses, hoping to avoid a company split. The company's stock price has dropped nearly 70% since the merger. Although a spin-off may seem attractive on paper, it would bring significant operational challenges and could lead to litigation and complex content transfer issues. The CEO and CFO are considering selling other assets. Warner Bros. Discovery will announce its second-quarter performance on Wednesday. The stock price has fallen more than 30% year-to-date
According to sources familiar with the matter, Warner Bros. Discovery Channel (WBD.US) leadership believes that splitting its traditional television network from its streaming and movie studio businesses is not the best option at the moment, as they hope to avoid a company split.
Warner Bros. Discovery Channel has been evaluating strategic options, including asset sales, to improve profitability and support its stock price. Since the merger of WarnerMedia and Discovery Channel to create this media group in 2022, the company's stock price has dropped by nearly 70%.
Sources indicate that while separating the streaming and movie studio businesses from the television business "may look attractive on paper, it would bring very challenging operational hurdles." This includes sports rights deals, as well as deciding which content will transition to television and streaming platforms.
A company split could also lead to lawsuits from debt investors, similar to what its competitor Lionsgate faced, and would complicate cross-platform and network content usage.
Reportedly, the CEO of this media group, David Zaslav, and CFO Gunnar Wiedenfels are currently considering selling other assets, such as Polish broadcaster TVN or stakes in the gaming business.
Warner Bros. Discovery Channel declined to comment. The company is set to announce its second-quarter earnings after the U.S. stock market closes on Wednesday.
As of the time of writing, Warner Bros. Discovery Channel's pre-market trading is up by 1.02%, at $7.96. The stock has fallen by over 30% year-to-date
