Warner Bros. Discovery considers breakup options, citing 'unsolicited' takeover interest

Warner Bros. Discovery (WBD) said Tuesday it has launched "a review of strategic alternatives" following what it said was "unsolicited" interest from multiple parties for both the entire company and its Warner Bros. studio division.

Shares, as a result, were up more than 11% in midday trading.

According to a statement, the media giant said the board will evaluate a range of options, including completing its planned split into two independent companies, Warner Bros. and Discovery Global, or pursuing a sale of all or parts of the business.

The separation, first announced earlier this year, remains on track for completion by mid-2026.

"We continue to make important strides to position our business to succeed in today's evolving media landscape by advancing our strategic initiatives, returning our studios to industry leadership, and scaling HBO Max globally," Warner Bros. Discovery CEO David Zaslav said in the release.

"It's no surprise that the significant value of our portfolio is receiving increased recognition by others in the market," he added. "After receiving interest from multiple parties, we have initiated a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets."

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The announcement comes just weeks after reports emerged that Paramount Skydance (PSKY), the David Ellison–backed company that recently completed its takeover of Paramount, submitted a majority-cash bid for the company, a move analysts said at the time could ignite a Hollywood bidding war and reshape the global streaming landscape.

Paramount Skydance has been eyeing all of Warner Bros. Discovery's assets, from HBO and CNN to the Warner Bros. studio lot, in a bid to boost its scale in streaming and advertising. Analysts have estimated the combination could create a top-five global player with roughly 200 million streaming subscribers and as much as $20 billion in annual TV ad revenue.

Warner Bros. Discovery reportedly rejected multiple bids from Paramount, while Netflix (NFLX) and Comcast (CMCSA) have emerged as other possible bidders. Paramount declined to comment when asked about the bids from Yahoo Finance.

Warner Bros. Discovery, Netflix, and Comcast did not immediately respond to requests for comment.Open for business: Warner Bros. Discovery is considering buyout offers. (Thomas Fuller/SOPA Images/LightRocket via Getty Images)·SOPA Images via Getty Images

The move marks another pivot for a company still navigating the fallout of its 2022 merger between WarnerMedia and Discovery, a tie-up that saddled it with more than $40 billion in debt. The company is under pressure to cut costs amid the rise of cord-cutting and streaming competition.

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KeyBanc analyst Brandon Nispel said the strategic review formalizes what investors had already been anticipating after multiple takeover reports surfaced in recent weeks.

"We believe this is positive to WBD," he wrote, citing the recent reporting that Comcast has likely joined ongoing conversations with Netflix and Paramount Skydance. "While Comcast's balance sheet is strong, entering a potential bidding war for a streaming platform and studio — both of which it already has — would be a negative for Comcast."

Nispel valued Warner Bros. Discovery at $20 to $24 per share, slightly above the stock's recent trading range'

Emarketer analyst Ross Benes added, "WBD was created through M&A and hopes to exit via M&A."

"The last few mergers associated with Warner have eroded shareholder value and resulted in layoffs, "he added. "But the company's TV networks, studio, and streaming service would still hold value to the right buyer."StockStory aims to help individual investors beat the market.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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