Warner Bros. Discovery shares saw a 7% increase on Tuesday after Bank of America (BofA) Global Research analysts recommended various strategies to enhance the company’s shareholder value. These strategies include selling the company or its assets, merging with a broadcast network, and executing a strategic spinoff.
Despite operating a profitable streaming platform, Warner Bros. Discovery faces challenges with its linear TV assets, leading to a 70% decline in stock value since its 2022 merger. This week, the company also began a new round of layoffs.
Bank of America analysts, led by Jessica Reif Ehrlich, highlighted the need for transformative changes to unlock the company’s embedded value. In their report titled “Is Unbundling the Answer?” they explored all potential options.
Selling the company might not attract many buyers and could face regulatory hurdles. Alternatively, selling assets like CNN, valued at $6 billion, or Warner Bros. Games, valued at $5.6 billion, could be feasible options.
Merging with a broadcast network, which is absent from Warner Bros. Discovery’s portfolio, was another option proposed. A broadcast network could reach a large audience, charge higher advertising rates, and provide premium sports programming like NFL games. Fox was suggested as a potential partner.
Combining broadcast, which targets an older audience, with streaming, which appeals to a younger audience, could boost total viewership.
BofA analysts also proposed a strategic spinoff, separating the company’s streaming and studio assets from its linear TV assets. This would leave most of the company’s debt with the linear TV subsidiary, which could then consolidate with other struggling media companies’ linear assets.