(BFM Stock Exchange) – The media group, which have the Batman, Superman licenses but also the series Game of Thrones,, The White Lotus Or Sopranosannounced its decision to separate its activities with cinema and streaming on the one hand and on the other hand linear television. A good old recipe to energize the stock market course.

Since the finalization of its merger with the American documentary chain (and owner of Eurosport) Discovery, in April 2022, the media group Warner Bros suffers on the stock market. The action of the company now called “Warner Bros Discovery”, and known in the cinema for Batman and Superman films as well as for series Game of Thrones,, Succession Or Sopranoswas divided by 2.5.

The fault of disappointing financial results, penalized, in particular, by the decline of traditional television, and by “flops” at the box office (as recently Joker: Folia with two of Todd Phillips and Mickey 17 de Bong-Joon Ho). On this last point, the group will soon try to relaunch the Superman franchise with the release of a new film in July.

Even video games have sometimes missed expectations. Last year, the financial director, Gunnar Wiedenfels, had recognized that the sales of the game Suicide Squad had not been up to the hopes of management.

Bank of America also pointed out that the merger between Discovery and Warner Bros had not kept its promises in terms of synergies.

“Despite everything, we believe that Warner Bros Discovery has one of the most interesting asset collections in the media field, which includes a library of films and television programs among the largest and efficient,” said Bank of America in a recent note.

“However, it appears to us more and more clearly than the company, as it is currently built, does not work as a listed entity on the stock market and that transformative changes are probably necessary to unlock the enormous value contained in these assets,” observed the bank.

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The hopeful split happens

In fact, many observers have speculated on a split in society with the streaming and cinemas studios on the one hand and on the other hand linear television. Several press information, relayed by many American media, went in this direction. CNBC, for example, mentioned this separation in early May.

Finally, Warner Bros Discovery agreed on Monday, June 9, announcing exactly this split. On the one hand, the activity “streaming and studios” will bring together the HBO Max streaming platform within the same company, the HBO cable channel and Warner Bros. cinema studios. On the other hand, most of the linear television, including CNN, TNT Sports and Discovery, will be grouped in a company called “Global Networks”. The director general of Warner Bros Discovery (WBD), David Zaslav, will take the lead of the first company, the financial director, Gunnar Wiedenfels, that of the second.

“This separation will energize each company by allowing them to take advantage of their specific forces and financial profiles. It will also allow each company to seize important investment opportunities and create value for shareholders,” said Gunnar Wiedenfels in a press release.

The aim of a stock market split is always the same: obtaining multiple scholarship holders (and therefore a market value) more generous for each listed company than those implicitly integrated into the only current listed company. This is due to the fact that the market generally prefers the “pure-players” of a sector that the conglomerates which brings together heterogeneous activities. This is due in particular to a lack of specialization and synergies between the different activities.

Moreover, following this announcement, which is largely telegraphied in the press, the title Warner Bros Discovery takes 10.4% on the New York Stock Exchange at the start of the session on Monday.

A large discount to fill

“A strategic split could create value,” said a recent note Bank of America. In an in -depth analysis, the American bank estimated that the “streaming and studios” division alone could be worth $ 35 billion on the stock market (and 44.5 billion including debt), $ 15 per share, while linear television activities could be valued at $ 5.35 billion, or $ 2.17 including the debt. Currently, Warner Bros Discovery is worth 24.3 billion dollars on the stock market and $ 10.8 per share, a discount of 33% compared to its post-hint theoretical value, according to calculations by Bank of America.

However, the stock market splits do not constitute a panacea. Vivendi knows something about it. The ex-general companion of waters was divided into four companies in December, with the IPO of Canal+ in London, that of Havas in Amsterdam, and that of Louis Hachette Group in Paris.

A few months later, the balance sheet is not frankly positive. “Three months after the split of Vivendi, there is no doubt that the split was destructive of value for the shareholders (…) and this whatever the date of reference taken into account,” said the specialized letter Vernimmen in April.

Its authors then noted that, compared to the announcement of the split project, mid-December 2023, the shareholder who would have kept his four actions after the split would have lost 13% of his wealth, to compare with an increase of 5% of the CAC 40 over the same period. By report, this time, on the eve of the split, last December, the loss increases to 6% against an increase in the CAC 40 of 8%.

This split has been enamelled with criticisms accusing the company for carrying out this operation only to allow the Bolloré group to increase its power on each company by benefiting from the regulatory generosity enabled by the various rating places in terms of OPA. Vivendi has always been breaking these accusations. The chairman of the group’s board, Arnaud de Puyfontaine, said in April that the operation was done in the interest of split companies and all shareholders.