With the new restructuring of Warner Bros. Discovery — having spun off cable businesses like CNN and Discovery from its broadcast and studios — there’s little doubt CEO David Zaslav is in the mood to sell things.
The more the merrier as far as Zas is concerned, that is if there are buyers.
Zaslav is at his core a balance 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 corporate America’s top balance sheet shaper, the late and great Jack Welch.
WBD shares have stayed below $10 for most of the year. The stock has fallen about 60% since the deal to combine Discovery with Warner Media ended in April 2022, meaning Zas knows he needs to do something, and fast.
His first step is to break up the company into two business units. The next step is some asset sales, say bankers On The Money.
Zas has been trying to pay for the media behemoth he runs since the merger, and it hasn’t been easy. Cord-cutting and the high cost of broadcasting, combined with a box office that hasn’t returned to pre-pandemic levels, have eaten into its wiggle room. He still has about $40 billion in debt to eliminate, and there are only so many jobs you can cut at CNN.
People who know Zass tell me he is hopeful that the incoming Trump administration will bring some sanity to the deal business, which was stymied by leftists running Biden’s regulatory agencies. They say if he had his druthers, he’d sell his entire company to a big tech player like Amazon, which is looking to build its Amazon Prime streaming service and possibly more.
One problem with that script: Trump also hates big tech, so a deal of that size might not get through Donald’s regulatory maze.
What will come of it are small sales, or perhaps the offloading of CNN and Discovery, bankers say. However, they believe that Zas will start small, a video game service or some Polish television network.
Then Zas will have to turn his attention to Discovery and/or CNN.
CNN, which is in the midst of a restructuring, has seen its already low ratings drop since the election, so it’s a tougher sell. Plus, Zas likes to have a news network with international reach, and the ratings could rebound with a livelier, younger occupant of the White House.
Discovery, meanwhile, has some interesting properties. I love Food Network and Animal Planet, but they are hurting viewers like the rest of linear TV.
The whole WBD shebang now has a market value of $26 billion, so expect a lot less for a sale of Discovery or CNN, meaning offloading both of those properties won’t be enough for Zas to pay off his debt.
If you know Zaslav, you know he plays the long game. He is 64 years old and worked in the media business for decades before he got the chance to run a network. He knows what he is up against and is not giving up his position so easily. So maybe Zas doesn’t do anything important for now, in case Trump’s people someday light up his dream of selling WBD on Amazon.
He can happily retire to a beach somewhere completely cool – along with his shareholders.
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Image Source : nypost.com