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Warner Bros. Discovery shares popped 7%, for the second time this week, on Thursday after a report emerged that the media conglomerate is eyeing a strategic spinoff to boost shareholder value.
The Financial Times reported, citing unnamed sources, that Warner Bros. Discovery CEO David Zaslav is looking into a number of strategies to boost the company’s share price, including separating its streaming and studio assets from its cable network business.
Despite operating one of the few profitable streaming platforms, Warner Bros. Discovery has been dragged down by its struggling linear TV assets. The company’s stock has plummeted 70% since the merger that created it in 2022. Additionally, the company started a new round of layoffs this week.
Warner Bros. Discovery did not immediately respond to a request for comment from Quartz.
The spin off was proposed earlier this week by Bank of America analysts.
Analysts at BofA, led by Jessica Reif Ehrlich, wrote, “it is becoming increasingly clear that the company, as it is currently constructed, is not working as a publicly traded entity, and transformative changes are likely required to unlock the considerable value embedded within these assets.”
The analysts proposed a spinoff where the company’s direct-to-consumer (streaming) and studio assets would separate from the company’s linear TV assets (cable channels). A key part of this strategy is that Warner Bros. Discovery would leave the majority of its $39 billion debt in the remaining linear company.
People briefed on the matter told the Financial Times that Warner Bros. Discovery has not hired an investment bank yet for any potential transactions but management is reportedly talking to advisors to find a solution.
One person familiar with the situation also told the Times that the company has reached out to rival groups to see if there is any interest in merging or buying some of the assets, per the same report.