Warner Bros. on Monday announced plans to split into two companies, one focused on movies and streaming, another for sports and news. WBD stock initially jumped on the move, then reversed to slide on the day.
Warner Bros. Discovery on Monday said plans to divide into two publicly traded companies aim to "maximize the companies' potential." The company had been created in a spinoff from AT&T, when WarnerMedia merged with Discovery in April, 2022.
The new streaming and studios company will consist of Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as their film and TV libraries.
The global networks company will include its sports and news television brands, including CNN, TNT Sports, Discovery, free-to-air channels across Europe, as well as the Discovery+ streaming service and Bleacher Report.
David Zaslav, CEO of Warner Bros., will serve as President and CEO of the streaming and studios company. Warner Bros. CFO Gunnar Wiedenfels will lead as President and CEO of the global networks company. Both will remain in their roles at Warner Bros. until the separation.
Warner Bros. intends to separate the businesses in a tax-free manner, which it plans to complete by mid-2026 subject to closing conditions and final board approval. Once finalized, the companies plan to implement arm's-length transition services and commercial agreements to maintain operational efficiencies.
Warner Bros. also announced a tender offer to enhance its debt portfolio ahead of the separation. The offer is funded by a $17.5 billion bridge facility provided by JPMorgan, and is expected to be refinanced prior to the split. The funds will provide both companies with a "clear path" to deleveraging, with "significant" cash flow and strong liquidity, according to the release.
The global networks company will hold up to a 20% retained stake in the streaming and studios business. Global networks plans to monetize that stake to enhance de-leveraging of its balance sheet.
Warner Bros. Stock
Warner Bros. shares jumped more than 10% to a high of 11.10 Monday on the news. But shares reversed for a 3% decline on the day.
WBD stock trading in a double-bottom base with an 11.90 buy point, according to MarketSurge chart analysis.
Shares are down almost 10% in 2025. Warner Bros. has a 21-day average true range ratio of 3.86%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
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