Just three years after Warner Bros. and Discovery joined forces in a $43 billion merger, the media giant is hitting rewind. Warner Bros. Discovery (WBD) is splitting itself into two separate publicly traded companies, one housing its streaming and studio assets, including HBO Max and Warner Bros. films, and the other taking on its legacy TV networks, such as CNN, TNT, and the Discovery Channel. However, this is hardly an original twist in the media saga. 

For more than two decades, industry giants have used spinoffs and corporate shake-ups as go-to strategies to navigate shifting consumer habits, digital disruption, and investor demands for leaner, more focused businesses. In fact, WBD’s latest move fits the trend as its cable TV model crumbles under the weight of streaming’s dominance, forcing a restructuring. Dubbed Streaming & Studios and Global Networks, the two companies will each have their own leadership and financial strategies. 

WBD’s present CEO, David Zaslav, will lead the streaming-focused arm, while CFO Gunnar Wiedenfels will take charge of the network side. The company believes the split, expected to close by mid-2026, will provide sharper focus, more flexibility, and better paths to reduce debt. So, what should be investors’ next big move in WBD’s ongoing split?

About Warner Bros. Discovery Stock

New York-based Warner Bros. Discovery (WBD) commands one of the largest cable TV portfolios in the industry, a product of its 2022 merger that brought together Warner Bros.’ networks like CNN, TBS, and TNT with Discovery’s lifestyle-heavy lineup, including TLC, HGTV, and the Discovery Channel. With a global footprint spanning more than 220 countries and available in 50 languages, the company delivers a vast range of content to audiences worldwide. 

The company’s market cap presently stands at about $26 billion. But despite its heavyweight status in the media world, Warner Bros. Discovery hasn’t been able to escape the drag of cable TV’s rapid decline. While its restructuring plans gave the stock a lift in recent trading sessions, it was not enough to pull the stock into positive territory for the year. 

Still, the recent glimmer of momentum cannot be ignored. WBD has climbed 12.2% over the past month, outpacing the broader S&P 500 Index’s ($SPX) 3.4% return in the same period, hinting that investors may be warming up to the company’s new direction. 

From a valuation standpoint, WBD is trading at a steep discount, just 0.62 times sales compared to the sector median of 1.27x. This gap highlights investor skepticism, likely tied to its legacy cable exposure. But for value-focused investors, it could also point to an overlooked opportunity.

Warner Bros. Discovery’s Q1 Earnings Snapshot

Warner Bros. Discovery’s fiscal 2025 first quarter results, released on May 8, were a mixed bag, revealing a shrinking top-line figure and continued losses. Revenue came in at $8.98 billion, down 10% year-over-year and well below the $9.59 billion analysts had expected. On the earnings front, the company reported a loss of $0.18 per share, an improvement from last year’s $0.40 loss, but still wider than Wall Street’s forecast of a $0.12 loss.

WBD’s latest quarter also revealed broad-based revenue declines across key areas. Advertising revenue dropped 8% year over year to $2 billion, while distribution slipped 2% to $4.9 billion. Content sales took the biggest hit, plunging 27% annually to $1.9 billion, and other revenues declined 7% to $247 million. 

Segment-wise, Streaming & Studios brought in $4.4 billion, down 12%, and Global Linear Networks posted $4.8 billion, a 7% drop, underscoring the pressure on both legacy and digital businesses. Before the company officially announced its plans to split, breakup rumors had already been swirling around WBD for some time, and for good reason. 

The company has been under intense pressure to rein in its substantial debt, streamline its sprawling business, and jump-start growth in a turbulent media environment. While WBD shaved off $2.2 billion from its debt in the first quarter, the burden remains hefty, with a towering $38 billion still looming large on its balance sheet. 

Adding to the strain, WBD’s cash reserves dropped to $3.9 billion as of March 31, 2025, down from $5.3 billion just three months earlier, signaling that the road to financial stability is still uphill.

What Do Analysts Expect for Warner Bros. Discovery Stock? 

Despite the company’s struggles and its shaky Q1 financial performance, Wall Street hasn’t lost faith in Warner Bros. Discovery just yet. Overall, analysts remain cautiously optimistic on WBD, sticking to a “Moderate Buy” rating. Of the 26 analysts offering recommendations, 12 are giving it a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining 13 are playing it safe with a “Hold.”

It’s a mixed picture, but the sentiment suggests there’s still faith in the company’s turnaround story. In fact, Warner Bros. Discovery’s dramatic split could just be the reset investors have been hoping for. WBD’s average analyst price target of $12.56 indicates 19.5% potential upside from the current price levels. However, the Street-high price target of $20 suggests that the stock can still rally as much as 90.3% from here.