WBD Credit Downgrade: Warner Bros Discovery Split
- Discovery (WBD) has been downgraded further into junk status by S&P Global Ratings.
- S&P Global Ratings lowered WBD's unsecured bond rating to BB from BB+, the second-highest junk rating.
- WBD revealed it holds approximately $35.5 billion in outstanding bonds in a presentation to investors.
Warner Bros. Finding’s bond rating has plunged to junk status following it’s decision to split into two separate companies, Global Networks and Studios & Streaming. S&P Global downgraded the media giant, citing concerns about the impact of the split and the decline in linear TV viewership, directly affecting its Global networks business. The company is also taking out a $17.5 billion bridge loan. With a negative credit watch in place, the future outlook is uncertain, especially with approximately $35.5 billion in outstanding bonds. News Directory 3 keeps a close eye on these market shifts. Will the strategic moves help Warner Bros. Discovery navigate the changing media surroundings? Discover what’s next.
Warner Bros. Discovery Faces Junk Status Amid Debt, Business Split
Updated June 10, 2025
Warner Bros. Discovery (WBD) has been downgraded further into junk status by S&P Global Ratings. This action follows WBD’s announcement that it will divide its operations into two distinct entities: Global Networks and Studios & Streaming. The company is also securing a $17.5 billion bridge loan to finance a tender offer for its unsecured bonds.
S&P Global Ratings lowered WBD’s unsecured bond rating to BB from BB+, the second-highest junk rating. The agency also revised the recovery rating, anticipating only a “modest recovery” for lenders if WBD defaults on payments. The addition of secured debt is expected to negatively impact the recovery prospects for unsecured debt holders.
WBD revealed it holds approximately $35.5 billion in outstanding bonds in a presentation to investors. S&P also placed WBD on a negative credit watch, indicating a potential further downgrade of the company’s ratings. The agency cited concerns that the business separation will weaken WBD’s credit quality and create uncertainty regarding its capital structure and leverage.
The Global Networks business, which includes CNN and TNT Sports, faces “significant secular pressure” due to declining linear TV viewership, subscriber losses, and reduced advertising revenue as audiences shift to streaming platforms. S&P anticipates further rating reductions upon completion of the separation, reflecting a less favorable outlook for the standalone Global Networks business and its ample debt burden.
This downgrade follows a previous action by S&P in May, when WBD’s rating was lowered from BBB- to BB+.At that time, S&P projected adjusted EBITDA of around $9 billion for the next three years and a leverage ratio exceeding 3.5 times until 2027. The agency also anticipated a 20% decline in global Networks EBITDA to $6.5 billion due to revenue declines and increased content costs.
Post-split, the Studios & Streaming division will encompass Warner Bros. Television Group,Warner Bros. Motion Picture Group, DC Studios, HBO, HBO Max, Warner Bros. Games, and related ventures. Executives project the streaming business to generate at least $1.3 billion in profit by the end of 2025, reaching 150 million subscribers by the end of 2026. The studios business is targeting $3 billion in annual profit, though a specific timeline remains unclear.
Global Networks will include CNN, TNT Sports in the U.S., Discovery, top free-to-air channels across Europe, Discovery+ and Bleacher Report (B/R). It will retain a 20% stake in the studios and streaming business to help the company deleverage and is expected to take the majority of WBD’s roughly $37 billion in gross debt.
Since the 2022 merger, Warner Bros.discovery shares have decreased by over 50%.
What’s next
The separation of Warner Bros. Discovery is expected to be completed by mid-2026. The company’s performance will be closely monitored by investors and analysts as it navigates the challenges of a changing media landscape and aims to reduce its debt burden.