With Warner Bros. Discovery new restructuring — hiving off the cable businesses like CNN and Discovery from its streaming and studios — there is little doubt that CEO David Zaslav is in the mood to sell stuff.
The more the merrier as far as Zas is concerned, that is, if there are any buyers.
Zaslav is at his core a balance-sheet freak. It’s a skill he honed during his long years at NBC Universal when it was a division of General Electric and he was a student of the best balance-sheet shaper in corporate America, the late, great Jack Welch.
Shares of WBD have hovered below $10 for most of the year. The stock is down around 60% since the deal to combine Discovery with Warner Media was completed in April 2022, which means Zas knows he needs to do something and fast.
His first step is the breakup of the company into two business units. The next step is some asset sales, bankers tell On The Money.
Zas has been scrambling to pay for the media colossus he is running ever since the merger and it hasn’t been easy. Cord-cutting and the high cost of streaming, combined with a box office that hasn’t returned to pre-pandemic levels, have eaten into his wiggle room. He still has some $40 billion of debt to eliminate and there’s just so many jobs you can cut at CNN.
People who know Zas tell me he is hopeful that the incoming Trump administration will bring some sanity to the dealmaking business, which was stymied by the lefties who ran Biden’s regulatory agencies. They say if he had his druthers, he would sell his entire company to a big tech player like Amazon, which is looking to build out its Amazon Prime streaming service and possibly more.
One problem with that scenario: Trump also hates big tech, so a deal of that magnitude might not get through The Donald’s regulatory maze.
What will get through is small sales, or possibly unloading CNN and Discovery, bankers say. They believe, however, Zas will start small, a video game service or some Polish TV network.
Then Zas will have to turn his attention to Discovery and/or CNN.
CNN, which is in the middle of a restructuring, has seen its already abysmal ratings tank even lower since the election, so it’s a harder sale. Plus, Zas likes having a news network with international reach and ratings might recover with a more colorful and newsier occupant in the White House.
Discovery, meanwhile, has some interesting properties. I happen to like the Food Network, and Animal Planet, but they’re hurting for viewers like the rest of linear TV.
The entire WBD shebang right now has a market value of $26 billion, so expect considerably less for a sale of Discovery or CNN, which means unloading both of those properties won’t be enough for Zas to pay down his debt.
If you know Zaslav, you know he plays the long game. He’s 64 years young, has toiled through the media business for decades before he got his chance to run a network. He knows what he’s up against and he ain’t giving up his perch that easily. So maybe Zas does nothing significant for now in the off chance the Trump people someday greenlight his dream of selling WBD to Amazon.
He can retire happily to some beach somewhere completely flush – along with his shareholders.
