Warner Bros. Discovery Needs to Switch Gears
By Movieguide® Contributor
Warner Bros. Discovery just “isn’t working,” according to finance analysts.
“Warner Bros. Discovery stock is down about 70% since its merger in 2022,” Quartz reported July 16. “Warner Bros. Discovery shares popped 7% on Tuesday following a report from analysts at Bank of America (BofA) Global Research that recommended a series of options that could help increase the company’s shareholder value. The moves included a company or asset sale, a merger with a broadcast network, and a strategic spinoff.”
Though its streaming platform has been profitable, its linear TV assets (cable channels) have caused the company’s downfall.
With the stock plummet comes a round of layoffs this week, as well. Nearly 1,000 employees will lose their jobs, with the majority in the finance department.
“Not all employees included in the layoffs have been informed of the decisions at the time of publication,” Variety reported July 16.
Analysts at BofA wrote, “It is becoming increasingly clear that the company, as it is currently constructed, is not working as a publicly traded entity, and transformative changes are likely required to unlock the considerable value embedded within these assets.”
The company has several options: selling itself, selling some of its assets such as CNN or Warner Bros. Games, merging with a broadcast network or unbundling itself from its linear TV assets.
“BofA’s most creative solution was to execute a strategic spinoff where the company’s direct-to-consumer (streaming) and studio assets would separate from the company’s linear TV assets (cable channels). A key part of this strategy is that Warner Bros. Discovery would leave the majority of its debt in the remaining linear company,” Quartz reported. “The TV business could then potentially consolidate with struggling linear assets from other media companies.”
It doesn’t help that there’s a recent lawsuit from Fubo against Warner Bros. Discovery, not to mention the company’s down $125m for a settlement regarding its AT&T merger, which was deemed unfair to investors.
Variety reported in February, “Fubo, which bills itself as a sports-first TV subscription streaming service, is suing Disney, Fox Corp. and Warner Bros. Discovery over the trio’s plans to launch a sports streaming bundle. In a lawsuit filed Tuesday, New York-based Fubo alleges that Disney, Fox and WBD, together with Disney’s ESPN and Hulu, have ‘engaged in a years-long campaign to block Fubo’s innovative sports-first streaming business resulting in significant harm to both Fubo and consumers.'”
“The complaint alleges that the forthcoming launch of their sports-streaming joint venture, pegged for the fall of 2024, ‘steals Fubo’s playbook’ and violates antitrust law,” Variety said about the suit, which is still ongoing.
Movieguide® reported:
The proposed bundle would include the three companies’ sports platforms, including ESPN, ACCN, TNT, TBS, TruTV, FS1 and BTN…
“Each of these companies has consistently engaged in anticompetitive practices that aim to monopolize the market, stifle any form of competition, create higher pricing for subscribers and cheat customers from deserved choice,” Fubo CEO David Gandler said when the lawsuit was announced.
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