Warner Bros Discovery (WBD) is exploring strategic asset sales as part of a broader effort to stabilize the company and avoid a potential break-up. Faced with a nearly 70% drop in its stock price since its formation in 2022, senior management, including CEO David Zaslav and CFO Gunnar Wiedenfels, are reportedly evaluating all options to reverse the decline.
While a corporate break-up was considered, WBD’s leadership concluded that such a move would create significant operational challenges, particularly around sports rights deals and content distribution across various platforms. The complexities of splitting the company, including potential lawsuits from debt investors, have led executives to consider it the “nuclear option,” only to be used as a last resort.
Instead, Zaslav and Wiedenfels are now focusing on divesting smaller assets. Among the potential sales are Polish broadcaster TVN and a stake in Warner’s video games division, which owns the valuable Harry Potter game franchise. These moves are intended to placate investors while management works on a broader turnaround strategy.
Despite the stock’s poor performance, WBD’s management believes that the company is significantly undervalued, estimating its true market capitalization at around $60 billion, compared to its current market value of $7.88 per share. The group has been under pressure to demonstrate a clear path to recovery, especially after the April 2022 merger between Discovery and WarnerMedia, which was intended to strengthen the company’s position in the competitive streaming market.
Since the merger, WBD has been focused on reducing costs and paying down debt, which has included layoffs and asset sales. The company recently cut about 3% of its workforce at CNN as part of a digital turnaround strategy. However, selling CNN is considered unlikely due to its strategic importance and the potential tax implications of such a sale.
As WBD prepares to report its quarterly earnings, management remains optimistic about the company’s future value, though they acknowledge that the current market conditions are challenging. Investors are being urged to remain patient as the company navigates this turbulent period.
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