Warner Bros. Discovery might split up to pay the bills

All that slashing and burning and pissing off creatives that David Zaslav did, and Warner Bros. Discovery is still drowning in debt. What’s the CEO of a big legacy media company to do? According to a new report from The Financial Times, the answer may be “make a new, separate company.” WBD is apparently considering splitting itself up, so that the movie studio and streaming service (Max) would be one company and the linear networks (CNN, TBS, TNT, Discovery Channel, etc.) would be another. 

The company has to figure its shit out soon, because the debt is hefty and its stock continues to fall. Zaslav has entertained a number of ideas, including M&A (Mergers and Acquisitions) with other studios like Comcast’s NBCUniversal or Paramount. But as Deadline points out, nobody wants to get in bed with WBD’s debt. To compare, Paramount, which was just acquired by Skydance Media, had $14 billion worth of long-term debt. Warner’s is closer to $40 billion. Nobody’s going to want to swoop in and take that problem off its hands. 

So WBD is going to have to handle the issue on its own, with possible solutions including selling off assets or splitting up the company. In the latter scenario, the legacy TV networks would be saddled with the debt and the movie studio and streaming service would be left to grow unburdened. The other option—and Financial Times notes this still might be the option WBD chooses—is to just continue with the current strategy. The current strategy has infamously included disappearing completed projects and laying off employees by the hundreds. It’s unclear just how much of that WBD would have to do to get itself out of the hole. There are sticky (and sometimes, as in the case of layoffs, abhorrent) complications for all of these plans. But Warner Bros. Discovery needs some kind of path forward if it’s going to survive.