WBD Admits That Scale Did Not Create Value as it Separates Cable Assets

Warner Bros. Discovery is the latest media giant to put a line on the bench. In a step we remember Comcast’s split was introduced last monthWBD will split its profitable but declining cable network business from its profitable and growing broadcast and studio businesses. Analysts say this move increases the possibility of the company’s dissolution.

As WBD said In a statement From mid-2025, it will create a “new corporate structure”, where the TV business will “focus on maximizing profitability and free cash flow”, while the broadcast and studios division will “focus on driving growth and strong returns on increased investments”. capital.”

The two new operating units will be named Global Linear Networks and Streaming & Studios. “This new structure should give the company more flexibility for future strategic actions, such as the strategic rotation of its studio and streaming assets,” according to analysts at Bank of America who spoke to the Financial Times. “We believe Warner Bros.’s streaming and independent studio assets will be an attractive acquisition target for many suitors.”

Unlike Comcast’s restructuring, Observers believe The odds are less favorable for WBD because it needs cash from its linear channels to pay off the heavy debt it took on when Discovery Networks merged with WarnerMedia and AT&T paid $43 billion in 2022. At that time the debt was worth $53 billion.

The company’s linear networks have been struggling for a while with WBD With a write-off of $9.1 billion on its channels in August after TNT Lost live NBA games To Amazon Prime Video.

The strength of the new broadcast and studio division is Topwhich got another boost this week when it agreed to Multi-year distribution agreement With Comcast (Xfinity in the US and Sky in the UK) laying the groundwork for the Max launch in Europe.

The agreement actually increases the overall fees Comcast will pay to distribute WBD’s networks, including TNT, CNN and Food Network, although the long-term outlook for cable is a drag on the group’s overall finances. WBD believes its new corporate structure will “also increase options to pursue further value creation opportunities for both divisions in an evolving media landscape,” the company said in a statement.

There are certainly expectations that the next Trump White House will look more positive Mergers and acquisitions activity Over the next few years, some analysts believe that 2025 could see big changes as media companies continue to downsize and consolidate.

Others are less confident about the effectiveness of WBD in the market. “While this reorganization may make any potential deal much easier to execute, and may shed a different light on the various fundamentals of these companies, we must also acknowledge that nothing in the announcement changes anything fundamental,” Moffett-Nathanson wrote. In the works of WBD.” According to senior analyst Robert Fishman Forbes.

All eyes will now turn to the other major media group, Disney. As Deadline notedAs Disney CEO Bob Iger said last year That the company’s linear networks “May not be essential” to its business.

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