👉 Background: Warner Bros. Discovery was formed in 2022 after a $43 billion USD mega-merger between WarnerMedia and Discovery. That merger came with a whopping $50 billion USD in debt. And, while Warner Bros Discovery has already chipped away $20 billion, there’s still a long way to go.

👉 What happened: Now, Warner Bros Discovery has now announced it’s splitting into two separate publicly listed companies:

• One will house its streaming and film studios. Think: HBO, Warner Bros. Pictures, DC Studios
• The other will keep its TV networks like CNN, TNT Sports and Discovery as well as digital assets like Bleacher Report and Discovery’s streaming service.

👉 What else: Most of the debt will sit with the TV networks biz. And it’s all part of the corporate split up to help investors know what they’re getting with each part of the business.

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What's the key learning?

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💡A corporate spinoff is when a company separates part of its operations into a new, independent business. Shareholders of the parent company typically receive shares in both new entities.

💡In Warner Bros Discovery’s case, the split separates the fast-growing content arm from the slower-moving TV business. For investors, it also gives more clarity, meaning they can back the streaming upside without worrying about TV decline.

💡Warner Bros. Discovery isn’t the first media giant to pull the ol’ split-to-survive manoeuvre:

• News Corp split up its business (21st Century Fox and Newscorp). It then sold off 21st Century Fox to Disney for $71 billion USD
• Viacom split into Viacom & CBS back in 2005…and then re-merged in 2019 when it became Paramount Global
• Even Time Warner (which owned HBO, Warner Bros., and CNN at the time) has demerged and spun off its print magazine business — Time Inc.