Warner Bros. Discovery Exploring Sale of Music Assets

Warner Bros. Discovery is exploring a sale of its music assets that could be worth upwards of $1 billion, according to a source familiar with the matter. The catalog is being shopped by famed entertainment attorney Allen Grubman.

While the potential sale — which was first reported by The Financial Times — is still in the very early stages, some of Warner Bros. Discovery’s current music partners could be potential buyers.

Universal Music Group (UMG) already administers the publishing assets, which are likely the largest part of the deal, and Warner Music Group (WMG) distributes WaterTower Music, Warner Bros. Discovery’s in-house record label.

The assets being shopped, including music and production music from the company’s television and film projects, are not the kinds of music rights that have made headlines over the past couple of years as investors have flocked to the music business. Unlike most publishing rights or royalty streams, the Warner Bros. Discovery assets are not tied to the steady growth trend affecting traditional streaming. That’s because relatively few people head to Spotify to stream the soundtracks for Game of Thrones, The White Lotus or Batman, for example, even if the television and film projects are smash successes. As such, these type of assets have historically trade lower than popular music rights — typically in the single-digit multiples.

The asset valuations will likely be tied to broadcast trends, which are growing slower for film and television than for music. But due to the depth of the catalog, which dates back decades, the package will likely be seen as an attractive and stable investment for any major music company or private equity fund.

Warner Bros. Discovery formed last year through the merger of AT&T’s WarnerMedia unit and Discovery Inc.

Warner Bros. Discovery, UMG and Grubman did not respond to requests for comment at the time of publishing. WMG declined to comment for this story.

Warner Bros. Discovery was formed last year through the merger of AT&T’s WarnerMedia Unit and Discovery Inc. Chief Executive Officer David Zaslav has made cutting costs core to the company’s turn-around strategy, leading to layoffs, the shut shutdown of CNN’s planned streaming service and the scrapping of “Batgirl” and “Wonder Twins.”

In December, the company warned that costs related to scrapping content were expected to rise by $1 billion to $3.5 billion.

While some analysts estimate the company could face financial restructuring costs of more than $4 billion related to the planned cuts, Warner Bros. Discovery executives have said its worth doing because the previously planned investments–made at a time when streaming subscriptions were more robust–would be even costlier to profitability.