Warner Bros Discovery Trading Volume Plummets 55.62% Despite Stock Price Surge Amid Major Split Announcement

On June 10, 2025, Warner Bros. Discovery (WBD) saw a significant drop in trading volume, with a 55.62% decrease from the previous day, totaling 6.98 billion. Despite this, the stock price rose by 5.04%, indicating a bullish sentiment among investors.

Warner Bros. Discovery has announced plans to separate into two distinct publicly traded companies. The first company will focus on streaming services and film production, while the second will encompass traditional television networks and sports programming. This strategic move aims to streamline operations and enhance the value of each division.

The separation is expected to be tax-free for U.S. federal income tax purposes, allowing both entities to operate independently without the burden of additional tax liabilities. The company has been working to reduce its debt load since the merger of Warner Media and Discovery in 2022, which brought together a diverse portfolio of entertainment assets.

Despite efforts to repay $19 billion in debt, Warner Bros. Discovery still carries a significant debt load of nearly $34 billion. The company's credit rating was recently downgraded to junk status by S&P Global Ratings, citing declines in traditional TV revenue and cash flow. The debt will be divided between the two new companies, with the majority likely to be allocated to the global networks division.

Both companies are expected to maintain strong liquidity, with the global networks business projected to generate substantial free cash flow. This cash flow will be used to further repay debt and support the growth of each division. The separation is part of a broader strategy to navigate the "generational disruption" in the media industry, as called for by CEO David Zaslav.