Warner Bros. Discovery (WBD.US) announced today that it plans to split into two separate companies: one focused on streaming and film, and the other on classic television operations. In pre-market trading, the company’s shares are up by approximately 9%.
Warner Bros. shares are surging over 9% in pre-market trading, approaching levels seen before the sell-off caused by the announcement of tariffs during “Liberation Day.” A flag formation has appeared on the company’s chart, the breakout of which indicates a theoretical potential for continued growth. According to classic technical analysis, the breakout range reaches $12.35. Source: xStation
The new entity (related to streaming) will include: Warner Bros. Television, Warner Bros. Motion Picture Group (which includes New Line Cinema, responsible for The Lord of the Rings, The Hobbit, and the IT series; Warner Bros. Pictures, known for Barbie, the Harry Potter series, and the Batman trilogy; Warner Bros. Pictures Animation, which released Looney Tunes, Lego movies, and Tom and Jerry), DC Studios (known for producing films and series from the DC comic book universe), HBO, and HBO Max (one of the leading streaming platforms alongside Netflix, Disney+, and Amazon Prime).
The company split is intended to facilitate more effective group management and enhance operational efficiency within individual business segments. The Global Networks (the second company) will primarily focus on developing new, innovative ways to collaborate with distributors to create new value for television audiences. One of the key aspects of its operations is expected to be an improvement in free cash flow.
This division comes at a very important time for the company’s operations. Although the entire streaming services market is growing significantly, and post-pandemic demand for cinema services remains high, the company’s revenues are in a downward trend. The net profit looks even worse, having been negative since Q2 2022 (with the exception of Q3 2024). At the same time, the company’s debt is regularly decreasing, and investment expenditures remain relatively stable, which creates potential room for improving generated cash flows.
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