With Warner Bros. Discovery's new restructuring (separating cable operations like CNN and Discovery from streaming and studios), there is little doubt that CEO David Zaslav is in the mood to sell. .
For Zas, the more buyers, the better.
Mr. Zaslav is a balance sheet fanatic through and through. It's a skill he honed during his years at NBCUniversal, a division of General Electric, where he was a student of corporate America's greatest balance sheet builder, the late, great Jack Welch. It was.
WBD stock has hovered below $10 for most of this year. Shares have fallen about 60% since the Discovery and Warner Media merger deal closed in April 2022, a sign that Zsasz knows he needs to do something soon. It means that.
His first step is to split the company into two business units. The next step is to sell assets, bank sources told On the Money.
Mr. Zsasz has been scrambling to pay for his media giant since the merger, but it hasn't been easy. Cord-cutting and the high cost of streaming, along with box office revenues that haven't returned to pre-pandemic levels, are eating away at his margins. He still has about $40 billion in debt to eliminate and so many people to cut at CNN.
People who know Mr. Zsasz say he hopes the incoming Trump administration will bring some sanity to the trading business, which had been stymied by the leftists who ran Mr. Biden's regulators. They say that if he had a leader of his own, he would sell the entire company to a big tech company like Amazon. The company is building an Amazon Prime streaming service and perhaps even more.
There is one problem with this scenario. Trump also hates big tech, so a deal of this size may not be able to make it through the Donald's regulatory maze.
Bank officials say it could be a small number of sales that would work, or that CNN and Discovery's sales could disappear. But they think Zas will start small, like a video game service or a Polish television network.
If that happens, Zas will have to turn its attention to Discovery and CNN.
CNN, which is in the midst of a rebuild, has had already dire ratings that have fallen even further since the election, making it even more difficult to sell. Additionally, Mr. Zsasz likes to have a news network with international reach, and a more colorful and newsworthy figure in the White House could help ratings rebound.
Discovery, on the other hand, has some interesting characteristics. I happen to like the Food Network and Animal Planet, but like all terrestrial TV, they are a pain for viewers.
The current market value of the entire WBD shebang is $26 billion, so a sale of Discovery or CNN is expected to be significantly lower. That means giving up both of those assets alone won't be enough to pay off Mr. Zsasz's debts.
Anyone who knows Zaslav knows he's in it for the long haul. He's young, 64 years old, and spent decades toiling in the media business before getting the chance to run a network. He knows what he's up against and won't give up his perch so easily. So Mr. Szasz may not be doing anything important for now, as President Trump may one day greenlight his dream of selling WBD to Amazon.
He will be able to retire happily with his shareholders on some beach somewhere out in the water.
