By Agencies
Fitch Ratings announced on Wednesday that it has downgraded Warner Bros. Discovery (WBD) to junk status, following the company’s recent announcement of a split into two separate publicly traded entities.
This decision comes as investors assess the potential effects of the split on the company’s debt holders.
Fitch analysts noted, “The downgrade reflects our expectation that post-transaction, WBD will be smaller and less diversified in a declining industry, with elevated leverage.”
They also warned that depending on the final capital structure, the company could face further downgrades.
On Monday, Warner Bros. revealed its plans to divide into two distinct companies: one will focus on Warner Bros. Pictures, DC Studios, and the growing HBO Max streaming service, while the other will include legacy cable channels like CNN and TNT.
This split, anticipated to be finalized by mid-2026, aims to help the company manage its substantial $37 billion debt, a result of the 2022 merger between Warner Bros. and Discovery.
