Warner Bros Discovery (NASDAQ: WBD) stock rose during intraday trading following reports that the media giant is contemplating a plan to separate its digital streaming and studio businesses from its legacy TV networks.
Warner Bros Discovery, the media conglomerate overseeing CNN and HBO, is considering a strategic overhaul to address its struggling stock price, according to a Financial Times report released Thursday.
CEO David Zaslav is evaluating several options for restructuring the company, including the potential separation of its Warner Bros movie studio and Max streaming service into a new entity. This move could potentially involve selling certain assets or creating a distinct business unit for its digital streaming and studio operations, separating them from its legacy TV networks.
The report indicates that most of Warner Bros Discovery’s substantial debt, approximately $39 billion as of March 31, could be retained by the pay-TV networks division if the company opts for a split.
The Financial Times reported that although the company has not hired any formal investment bank to initiate a specific transaction, its leadership has been discussing matters with advisors. Additionally, the publication stated that people close to WBD have informally approached advisers from rival media companies to gauge their interest in exploring potential M&A options involving some of its existing assets.
Analyst Perspectives
In a note to clients this week, Bank of America analysts have suggested that Warner Bros Discovery could unlock significant value for shareholders through strategic options, including a potential sale.
Bank of America said in a note,
“While several financial assumptions behind the combination of Warner Media and Discovery have not materialized, we still believe several of WBD’s assets are best in class with tremendous unrecognized value.”
Similarly, Benchmark analysts highlighted that they consider assets such as the Warner Bros. studio, Max/HBO, and CNN to be “crown jewel” global media assets. They suggested that the recovery of Warner Bros Discovery’s stock price may also hinge on mitigating the decline in value associated with its linear TV networks.
Warner Bros Discovery (NASDAQ: WBD) Stock Reaction
WBD stock jumped 2.40% on Thursday, closing at $8.52, marking a 15.45% increase for the week. The trading volume was 59,286,208 shares, significantly higher than the average daily volume of 29.62 million.
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