Warner Bros. Discovery (WBD.US) plans to sell 20% of its streaming media assets before the split, with the CFO stating that they are seeking "full value".

Warner Bros. Discovery (WBD.US) is implementing a separation plan and may sell 20% of its stake in its film and television studios and streaming business before completing the separation next year. Chief Financial Officer Gunnar Wiedenfels said at the Bank of America Corp Media, Communications and Entertainment Conference: "We hope to achieve its full value. Prior to completing the separation in the second quarter of next year, several reputable institutions have consulted on investment matters." Based on an analysis of the company's separation plan, asset value release path, and potential catalysts, Bank of America has maintained a "buy" rating on Warner Bros. Discovery and set a target price of $14. Under the separation plan, the "Discovery Global" company, which includes traditional television and digital networks such as CNN and Discovery Channel, will hold a 20% stake in Warner Bros., which includes the film and television studios and HBO Max streaming business. Wiedenfels pointed out that Warner Bros., burdened with debt after merging with Discovery Channel, has reduced its net debt to about $30 billion and will further reduce it significantly by the end of the year. Selling equity is another "creative toolbox" to help reduce debt, which is a matter he has recently started to focus on. Any potential transaction will require "trade-offs" as Warner Bros. hopes to "gain full value." Obtaining equity injections at a reasonable valuation is a key cornerstone of the entire transaction." Wiedenfels said the company has a year to complete the tax-free transaction, but "investors have expressed a desire to negotiate early." He emphasized that Warner Bros. is committed to creating "two highly promising companies," with current Warner Bros. CEO David Zaslav leading the film and television studios and streaming business. Regarding the industry trend of traditional television networks splitting up companies like Comcast Corporation Class A, Wiedenfels said: "We will evaluate all options, but always adhere to cautious principles, with a focus on creating real value opportunities." On June 9, Warner Bros. announced that it will split into two publicly traded companies through a tax-free transaction, namely Streaming & Studios (S&S) and Global Networks (GN). Streaming & Studios includes Warner Bros. TV, film group, DC Studios, gaming department, HBO and HBO Max, and TV/movie libraries. Bank of America views it as the "crown jewel" of the media sector, with its intellectual property and content library value overshadowed by past heavy debt burdens and challenges in traditional cable TV business. After the split, this business segment is expected to break free from debt constraints, ignite growth potential, and be highly attractive to potential acquirers seeking to expand their scale. Global Networks includes assets such as linear entertainment, sports, and news TV channels globally. Despite market pessimism towards traditional linear TV business, Bank of America points out that with appropriate capital structure and management team operations, this business still holds untapped equity value creation potential at current valuation levels. Potential strategic options include cash management, integration with similar linear assets, asset sales, and private equity investments.