
Warner Bros. Discovery shares climb as CNN parent weighs splitting company: report
Warner Bros Discovery is moving towards a potential breakup, CNBC reported Thursday, as media companies explore options for their struggling cable TV businesses and sharpen focus on their faster-growing streaming and studios divisions.
The company's shares surged more than 4% on the news, rebounding from earlier losses of nearly 6% triggered by a dour quarterly report.
Warner Bros Discovery missed first-quarter revenue estimates and posted a larger-than-expected loss earlier in the day due to a sluggish box office performance and ongoing declines in cable.
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3 Warner Bros Discovery missed first-quarter revenue estimates and posted a larger-than-expected loss earlier in the day due to a sluggish box office performance and ongoing declines in cable.
REUTERS
It did not immediately respond to a Reuters request for comment on the CNBC report, which cited unnamed sources.
WBD laid the groundwork for a possible sale or spinoff of its declining cable TV assets in December by announcing a separation from its streaming and studio operations.
It reported results under the new structure for the first time on Thursday.
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A split would align WBD with Comcast, which is spinning off the fading NBCUniversal cable TV networks, including MSNBC and CNBC, to position itself for growth in the streaming era.
Analysts have long speculated about a break-up of WBD, whose assets include CNN, HBO and the coveted Warner Bros studio.
Bank of America research analyst Jessica Reif Ehrlich said last year that WBD's cable television assets are a 'very logical partner' for Comcast's new spin-off company.
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Like others in the media business, Warner Bros Discovery is losing thousands of cable TV subscribers each year, putting pressure on the company to consistently produce hit content and boost profitability in its streaming business.
The threat of US tariffs on foreign-made films has also added to the headaches of an industry whose biggest-budget films are often produced across several continents.
3 Analysts have long speculated about a break-up of WBD, whose assets include CNN, HBO and the coveted Warner Bros studio.
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Studio weakness
In the January-March quarter, WBD struggled to replicate the success of last year's 'Dune: Part Two,' which grossed more than $700 million.
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The company's marquee release for the period, Bong Joon Ho's sci-fi dark comedy 'Mickey 17,' earned only slightly more than its reported budget at the box office.
That meant studios revenue fell 18% to $2.31 billion, missing estimates of $2.73 billion, according to Visible Alpha.
The company has, however, made a strong start to the second quarter with Ryan Coogler's horror film 'Sinners' and the blockbuster 'A Minecraft Movie,' which has raked in around $900 million globally, making it the biggest release of 2025 so far.
Its summer lineup also looks strong with 'Superman,' directed by Marvel's long-time hitmaker James Gunn, set to release in July.
3 The blockbuster 'A Minecraft Movie' has raked in around $900 million globally, making it the biggest release of 2025 so far.
AP
Revenue at the TV networks segment, which includes CNN, Discovery Channel and Animal Planet, fell 7% in the quarter.
Overall, revenue fell 10% to $8.98 billion, missing analysts' average estimate of $9.60 billion, according to data compiled by LSEG.
Loss of 18 cents per share was also larger than expectations for a 13-cent loss.
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Still, its streaming business was a bright spot.
WBD added 5.3 million streaming subscribers in the quarter, compared with 3.1 million estimated by analysts, according to Visible Alpha, taking its total to 122.3 million.
The quarter featured some strong content slate including the third season of HBO's 'The White Lotus' and the medical drama series 'The Pitt.'
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CNBC
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- CNBC
European defense stocks have soared this year — could a rare earths bottleneck put a lid on the rally?
European defense companies have seen a monumental rise in value this year, as a regional push to ramp up military spending sparks a bull run on the sector. Strategists, analysts and industry leaders spoke to CNBC about the outlook for the industry, which has The industry has seen several stocks more than double in value in just six months but it now faces a shortage of rare earth minerals. Experts were divided on whether the sector has reached its peak as some analysts told CNBC they see more upside ahead, while others said the supply bottleneck could frustrate the sector's progress. Regional defense stocks were in positive territory on Wednesday, with the Stoxx Europe Aerospace and Defense index around 0.6% higher after climbing down from larger gains seen in early trade. Over the course of 2025, the index has gained around 45%. Momentum 'remains firmly in place' Loredana Muharremi, equity analyst at Morningstar, told CNBC on Wednesday that regardless of supply chain constraints, there was still upside ahead for the European defense sector. "While rare earth bottlenecks are a material supply chain risk, we do not believe they are sufficient on their own to trigger a correction in European defense stocks," she said in an email. "Most of the sector's rerating has been driven by structural demand growth tied to multi-year procurement cycles, rising NATO budgets, and renewed national rearmament efforts — momentum that remains firmly in place." However, Loredana noted that rare earths and other critical raw materials are becoming a growing strategic vulnerability. This is of particular concern for high-performance systems such as radar, missiles, precision-guided munitions, and propulsion technologies. Europe sourced almost 90% of its yttrium in 2023 — a rare earth element used in the manufacturing of fighter jets, land vehicles and targeting systems — from China, according to Morningstar. "A prolonged period of import restrictions could begin to affect production schedules," Muharremi said, adding that prospects of diplomatic engagement between China and EU mitigate the likelihood of any severe supply shocks. Wednesday's positive momentum among Europe's defense stocks marks a reversal from a three-day sell-off, which culminated in the index shedding 3% as investors awaited news from high stakes U.S.-China trade talks in London. At the center of the talks was Chinese export controls over rare earth minerals, which are critical in the manufacturing of defense technologies . Following a second day of negotiations, it was announced that Washington and Beijing's representatives had reached an agreement, which would be put before their respective presidents for approval. U.S. Commerce Secretary Howard Lutnick told reporters Chinese restrictions on rare earths were "fundamental" to the agreement. Speaking to CNBC's Charlotte Reed on Wednesday, Thales CEO Patrice Caine said the situation was gradually improving, while warning that supply tensions could affect areas like mechanical parts and electronic boards. However, he downplayed the direct impact an ongoing bottleneck would have on Thales' operations. "It's much lower down in our supply chain, so it's not directly visible to us," Caine explained. "Of course, if we lack these key resources at one stage it will impact us, but for the moment it's much too low in the supply chain to be visible and have any impact on what we do at the other end." French defense giant Thales, which supplies companies and governments with defense technology, has seen its shares jump around 80% so far this year. Back in March, Caine told CNBC planned defense spend hikes in Europe ought to remain in the region and benefit companies native to the bloc. 'Hard to see' another big boost for sector Maximilian Uleer, Deutsche Bank's head of European equity and cross asset strategy, is cautious on the sector, regardless of what happens to the supply of rare earth minerals. "European [defense] stocks increasingly reflect higher spending plans," he said in a Friday note, pointing out that the average price to earnings ratio in the sector had moved much higher since the beginning of the year. Uleer added that markets were expecting military alliance NATO to propose its members commit to spending 5% of their GDP on defense — a notion touted by U.S. President Donald Trump that has had a divided response from European leaders — at its upcoming summit. "The biggest spender, Germany, has already announced a plan to invest accordingly … This could support further inflows [to the sector] short term," he said. "But apart from that, it is hard to see how the NATO summit could beat expectations and what the next driver for the Defence sector will be. We see limited upside for the sector in H2." Aymeric Gastaldi, international equities portfolio manager at Edmond de Rothschild Asset Management, disagreed, arguing that the long-term outlook has "fundamentally changed" for the sector. "The combination of growth and visibility commands a structurally higher multiple for the whole sector," he told CNBC in an email on Wednesday. Edmond de Rothschild Asset Management expects sales of European defense to grow by more than 150% over the next seven years. "The sector will benefit from the rise of defense spending from < 2% GDP to +3%, the rise of equipment spending within the overall mix from 35% currently to 40%-50%, and the willingness of European countries to source more of their spending locally," Gastaldi explained. "Now, Germany is contemplating boosting its military spending towards 5% of GDP by 2032. This is a sea change." Having pared some of the gains seen in the wake of a European commitment to ramp up defense spending , the regional Aerospace and Defense index is now up by around 45% since the beginning of the year. Some of the regional defense giants, however, have seen much steeper year-to-date rallies. Tank parts maker Renk has soared around 270% so far this year, while arms manufacturer Rheinmetall has surged 172% and defense tech giant Hensoldt is up by 163%. German players have been major beneficiaries of the bullish sentiment toward the sector, thanks to the country's historic debt reform in March that paved the way for greater spending on national security. Short term, Edmond de Rothschild's Gastaldi conceded that there could be some tactical sell-off as investors questioned whether the sector had peaked. "However, in the long-term we still see value in the space, and in a context of low economic growth, companies that are able to post high and robust earnings growth will trade on [a] much higher multiple than the market," he said. Mark Boggett, CEO of Seraphim Space, which manages a space tech investment fund, also told CNBC he did not believe regional defense stocks had reached their peak. "Global defence priorities are undergoing a fundamental, structural transformation," he argued. "Governments worldwide are not only maintaining but also accelerating investments in sovereign space capabilities, recognizing the critical strategic importance of space-based infrastructure for national security." He pointed to Trump's recently announced $1 trillion defense budget that would include a so-called "Golden Dome" missile defense system , as well as the European Union's plans to mobilize up to 800 billion euros ($917.5 billion) for defense spending.


CNBC
an hour ago
- CNBC
Jim Cramer says IPOs to come from speculative names in space, quantum computing and nuclear power
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CNBC
an hour ago
- CNBC
Jim Cramer says it's time for the U.S. to negotiate with other countries for rare earth minerals
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