On Monday, Warner Bros. Discovery announced it will undergo a significant restructuring by splitting its operations into two distinct companies. This move will separate its studios and streaming services from its cable television networks.
This strategic division aims to enhance Warner Bros. Discovery’s competitiveness in the streaming arena, enabling its streaming division to expand content production without the constraints of its underperforming cable networks.
After the separation, Warner Bros. Discovery CEO David Zaslav will oversee the streaming and studios business, while CFO Gunnar Wiedenfels will take charge of the global networks unit.
“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,” Zaslav stated.
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This corporate restructuring comes on the heels of the 2022 merger of WarnerMedia and Discovery, and it is set to be executed as a tax-free transaction, expected to conclude by mid-2026.
Following the announcement, shares of Warner Bros. Discovery rose by 8% during the morning trading session.
In December, the company laid the groundwork for a possible sale or spinoff of its cable TV assets by announcing the separation of its streaming and studio operations.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WBD | WARNER BROS. DISCOVERY INC. | 10.53 | +0.71 | +7.23% |
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The division aligns Warner Bros. Discovery with Comcast, which is also in the process of spinning off several of its cable television networks. Bank of America research analyst Jessica Reif Ehrlich noted that Warner Bros. Discovery’s cable assets could prove to be a suitable partner for Comcast’s new spinoff entity.
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In a further effort to manage its finances, Warner Bros. Discovery has initiated tender offers aimed at restructuring its existing debt, supported by a $17.5 billion bridge loan arranged by JPMorgan.
This bridge loan is anticipated to be refinanced prior to the company’s proposed separation, with plans for the global networks division to maintain a 20% stake in its streaming and studios division, which it seeks to monetize to help alleviate its debt burden.
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JPMorgan and Evercore are providing advisory services to Warner Bros. Discovery for the transaction, while Kirkland & Ellis acts as legal counsel throughout the process.
Reuters contributed to this report.
