NEW YORK: Just three years after arguing that the best way to boost the value of Warner Media and Discovery Inc was to combine their assets, chief executive officer David Zaslav now says that the real key to unlocking their potential worth is to split them apart.
The stock has declined about 60% since that merger was completed in April 2022, wiping out some US$40bil from the company’s market value.
The announcement on Monday will split Warner Bros Discovery Inc into two separately traded public companies, one focused on the fast-growing streaming assets and film studios, and the other which will house the struggling legacy cable TV channels.
The decision is just the latest reversal for Zaslav, who has come under fire for multiple missteps in running the parent company of HBO, CNN, TV and film studios and sports broadcasting.
The move is also an opportunity, perhaps even a final chance, for Zaslav, 65, to transform Warner Bros into the leading global entertainment company he originally envisioned.
“By operating as two distinct and optimised companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said in a statement on Monday.
Investors seem unsure whether to buy Zaslav’s latest pitch. After an initial spike higher when the news was announced, the stock turned around and the shares closed down 3% on Monday.
Representatives for Zaslav said he wasn’t available for an interview.
The separation is expected to be completed by the middle of next year.
Zaslav was the architect of the merger between AT&T Inc’s WarnerMedia and Discovery, which he had been running since 2006. The move married WarnerMedia’s brands like HBO with the more populist programming at Discovery as Zaslav looked to build a rival to streaming giant Netflix Inc.
It also saddled the new company with billions of dollars in debt, an albatross that has continued to weigh on its valuation. — Bloomberg
