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2d ago

Warner Bros. Discovery Downgraded to Junk Status by S&P

S&P Global Ratings cites linear TV revenue declines and high debt as key factors in lowering WBD's credit rating to BB+, while the company prioritizes streaming growth over rapid debt reduction.

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Overview

  • S&P Global Ratings has downgraded Warner Bros. Discovery's credit rating to BB+, classifying it as speculative-grade or junk status.
  • The downgrade reflects ongoing revenue declines in WBD's linear TV operations, which offset growth in its streaming and studio businesses.
  • S&P projects WBD's debt-to-equity ratio will remain above its 3.5x investment-grade threshold until at least 2027, reaching 4.3x by the end of 2025.
  • Despite high leverage, Warner Bros. Discovery is focusing on investments in its streaming and studio divisions rather than accelerating debt reduction.
  • Moody’s and Fitch Ratings continue to rate WBD one notch above junk, while S&P warns that any potential company split could further weaken credit metrics.