Warner Bros. Discovery is considering selling its music library, a move that could pull in more than $1 billion and help the company pay down some of its $50.4 billion debt, The Financial Times reported.
The library has its roots in the Warner Bros. movie studio’s music division, created in the 1950s. Predecessor company Time Warner sold off the music division in 2004. The separate company, powerhouse Warner Music Group, went public in 2020.
But while the music recording business was sold off, Warner Bros. Discovery still owns the copyrights to a vast collection of soundtracks and other music. The FT cited sources that said the trove could be worth more than $1 billion.
A sale, then, would be in keeping with the movies CEO David Zaslav to reshape the business following the April merger of WarnerMedia and Discovery that created the company, which includes HBO, Warner Bros. Studio, CNN and a host of other channels and streaming apps.
Zaslav said in the days after the combination that the company needed to shave $3 billion from its budget. He upped that total to $3.5 billion in October when reporting third-quarter financial results, which showed that the company is carrying $50.4 billion in debt at the end of the quarter, after paying off about $2.5 billion.
Some cost cutting came through layoffs of hundreds of workers, cut production on multiple projects including the now infamous nixing of “Batgirl,” in an effort to elevate the DC brand, eliminated the CNN+ streaming effort and cancelled JJ Abram’s HBO series “Demimonde.”
Chief financial officer Gunnar Wiedenfels last week said that the restructuring that happened in 2022 will make the company healthier going forward. “We shaved off a lot of the excess last year,” he said at an investor conference hosted by Citi.
“We got a lot of public noise about some of the content write-offs that we took, which is a reflection of an industry that went overboard, and that went on a spending frenzy,” Wiedenfels said.
“We are just consistently and continuously looking at how we’re running the business . . . What makes sense? What doesn’t make sense?” he added.
Ironically, among the more valuable rights in the Warner Bros. Discovery music library are the soundtracks to the “Batman” movies.
The sale process is in the early stages, the FT said, adding that any deal would hold stipulations over access to and use of certain soundtracks, said one person close to the situation.
A catalog sale would follow a trend of selling music rights seen across the industry in recent years, from Bob Dylan to Bruce Springsteen and Neil Young to Joey Ramone
The swell of catalog sales to the corporate and private equity world reflects the potential for future income from those songs, which could become even more valuable riding off future hits or other usage.
After a bruising 2022 when the stock lost more than half of its value, shares in Warner Bros. Discovery have increased by more than a third this year, as investors bet that the worst is over in terms of losses and restructuring costs. “At this point, the majority of heavy lifting (related to restructuring charges etc) has been completed,” said Bank of America analyst Jessica Ehrlich.
