Credit: Warner Bros. AnimationWarner Bros. Discovery is reportedly on the cusp of a pretty major split.
Warner Bros. Discovery (WBD) has had an eventful few years, to say the least. In 2022, WarnerMedia completed a merger with Discovery, which was intended to strengthen its position in the competitive media landscape. Fast forward two years, however, and that is certainly not the case. A combination of a shrinking ad market, the aftermath of COVID-19, and the SAG-AFTRA and Writers Strikes in 2023 have taken their toll on WBD.
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It doesn’t help that its box office performance has been, for the most part, dire. The Flash (2023) apparently lost WBD up to $200 million – a loss that ranks up there (or down there?) with the worst in cinematic history and wasn’t helped by the fact that its lead, Ezra Miller, was kept far away from the press due to their extensive list of controversies.
Meanwhile, Blue Beetle (2023) also took home a disappointing total of $130.8 million on a $125 million budget, while Furiosa: A Mad Max Saga (2024) only made $172.8 million on its $168 million budget, despite strong reviews.
It wasn’t all doom and gloom. After all, Barbie (2023) went on to become the highest-grossing film of 2023 after raking in $1.446 billion. However, it’s still not enough to save the struggling company, which is apparently floating an escape plan that involves basically just pretending the merger never happened – because, obviously.
As per the Financial Times, WBD is reportedly considering a “dramatic plan” to split its business divisions into two. One would consist of its streaming and studio operations, while the other would encompass its traditional TV networks (which include the Discovery Channel, Food Network, and CNN).
WBD CEO David Zaslav is apparently considering multiple options, “ranging from selling assets to hiving off its Warner Bros. movie studio and Max streaming service into a new company.” The company has also apparently been approached about selling some of its assets.
However, breaking up the business is considered the “strongest option” right now as it would help it tackle both its declining stock price (which closed at $8.34 on Wednesday) and its debt (which currently sits at a cool net of $39 billion, and would be shifted onto the TV network side of the business). WBD also reportedly plans to axe nearly 1,000 employees.
Whether or not the split goes ahead, something has to change at WBD. Earlier this week, analyst Jessica Reif Ehrlich stated that WBD is definitively “not working” (via Business Insider) and that “staying the course appears to be untenable.” Even if it forgoes a formal split, it seems inevitable that WBD will need to start selling assets at some point – which, eventually, would leave the company split regardless.
This plan comes as Warner Bros. Discovery makes concerted efforts to capitalize on its rather valuable collection of IP. At present, the studio has the rights to solid franchises such as Harry Potter, Lord of the Rings, and DC (which has its own division at Warner Bros. Entertainment, DC Studios).
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In recent years, it’s done its best to use these franchises as financial life rafts. For example, HBO is currently working on its televised reboot of Harry Potter (one book per series), with the project having shifted from Max to the network in June after Warner Bros. Discovery decided to switch its strategy when it comes to big-budget titles. It also switched the upcoming It prequel series, Welcome to Derry, to HBO for the same reason.
Warner Bros. Discovery has also been performing historic content purges. Not only have multiple finished projects been canceled – such as Coyote vs. Acme, Batgirl, and Scooby-Doo: The Haunted High-Rise – for tax write-offs, but the higher-ups at Warner Bros. Discovery have also removed numerous popular projects from Max (previously known as HBO Max), such as Steven Universe: The Movie and Westworld, despite owning the rights themselves.
What do you think of Warner Bros. Discovery breaking up into two companies?