Warner Bros. Discovery To Split Its Operations Into Separate Entities By 2026 – What It Means For DC Studios And Company Debt
After reports and some radio chatter, figuratively, Warner Bros. Discovery is moving ahead with the breakup of its operations into separate functioning brands. These brands will be in the same family but work autonomously with their own directors as two publicly traded companies.
Like reports and speculation figured, the new companies will reverse some of what the Warner and Discovery merger did when it was finalized. They will split off the news, sports, and Discovery portions of the business away from the movie studios, the TV division, HBO, and streaming.
The company, incorporating Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, will be Streaming & Studios, headed up by David Zaslav. The company, consisting of CNN, TNT Sports, Discovery, Discovery+, and Bleacher Report (B/R), among other assets, will be labeled Global Networks and headed by WBD CFO Gunnar Wiedenfels.
“The cultural significance of this great company and the impactful stories it has brought to life for more than a century have touched countless people all over the world. It’s a treasured legacy we will proudly continue in this next chapter of our celebrated history,” Zaslav said in the press release.
“By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” he added.
“This separation will invigorate each company by enabling them to leverage their strengths and specific financial profiles. This will also allow each company to pursue important investment opportunities and drive shareholder value,” Wiedenfels commented with his perspective.
“At Global Networks, we will focus on further identifying innovative ways to work with distribution partners to create value for both linear and streaming viewers globally while maximizing our network assets and driving free cash flow,” he continued.
Samuel Di Piazza, Jr., Chair of the Warner Bros. Discovery Board of Directors, explains, “We committed to shareholders to identify the best strategy to realize the full value of our exciting portfolio of assets, and the Board believes this transaction is a great outcome for WBD shareholders.”
Di Piazza adds, “This announcement reflects the Board’s ongoing efforts to evaluate and pursue opportunities that enhance shareholder value.” Both companies will have an individual presence on the stock exchange. The tax-free move will be completed in mid-2026 if it goes according to plan, pending approval of WBD’s Board of Directors.
It’s a bold strategy, Cotton, but we have to see how it pays off when WBD mentions debt and deleveraging in their announcement. What this all means when put together, as analysts and reports, such as one by the CBC point out, is that they are debt-conscious. They have $38 billion of debt as of March, which they are trying to restructure and get rid of.
What they’re doing is shuffling some things around in the portfolio and offloading the majority of their debt onto Global Networks. It will be a new venture, sort of, but it will encompass assets with bad reputations and/or losing market value (e.g., CNN, especially).
Over on the sports and entertainment side, content providers like AEW and the NHL can bring in satisfying numbers to the WBTV networks, and even crow about it all they want. The fact is, cable and broadcast TV are dying, and WBD knows this. As such, they are looking to the present and future of where the money is: streaming.
They are satisfied with Max’s growth, and they want to maximize the viability of it and HBO by bringing the latter factor back into the equation. Max is becoming HBO Max again soon. Global Networks is going to be separate from that, plus a risky, debt-heavy investment for stockholders on top of it.
The split comes with other difficulties. For instance, “Creditors of Warner Bros. Discovery are consulting advisers after the company proposed banning investor co-operation pacts as part of its plan to split, the Wall Street Journal reported on Monday,” CBC noted. “Law firm Akin Gump Strauss Hauer & Feld is organizing bondholders to push back against the proposal and negotiate better terms, the Journal reported, citing people familiar with the matter.”
They also note WBD stock fell midday after the announcement of the split, after a quick gain. Overall, their stock is down 60 percent since the Discovery merger. CBC reached out to the CEO of a strategic advisory and consulting firm called Madison Wall, Brian Wieser, who doesn’t see the upside of WBD’s machination here.
It could actually backfire and “make them worse off by favouring financial engineering over focusing on improving existing operations or pursuing new opportunities for growth,” he says, “a deal like this can hamstring both sides of the company until the transactions are closed.”
Still, the split looks like good news for DC Studios and its relevant IPs, for now, as nothing is about to alter the path their on – one Zaslav has expressed his full support for in the past. That said, the costs and debt keep piling up with Superman, which might be more expensive than everybody lets on.
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