WBD bond buy tender offer

Warner Bros. Discovery Debt Tender Offer: An Analysis of Debt Reduction and Capital Structure Optimization

1. Executive Summary

Warner Bros. Discovery (WBD) has initiated a significant debt tender offer, a strategic maneuver designed to optimize its capital structure in anticipation of the planned separation of its WBD Streaming & Studios (WBD S&S) business into a new publicly traded company. This comprehensive liability management exercise aims to achieve substantial debt reduction and enhance financial flexibility for both WBD Global Networks (WBD GN) and the future WBD S&S entity.

Based on a detailed analysis of the offer parameters, WBD is estimated to achieve a total debt reduction (face value) of approximately $17,702.00 million. This considerable reduction in outstanding principal is projected to be achieved with an estimated total cash outlay of approximately $14,609.68 million. The difference between the face value of debt retired and the cash paid results in an estimated $3,092.30 million gain on debt extinguishment.

The primary driver for this tender is not merely opportunistic debt repurchase for immediate financial gain, but rather a strategic imperative to achieve a specific capital structure that supports the upcoming spin-off and provides operational agility. While the offer involves paying premiums over pre-announcement market prices for many tranches, the overarching objective is to reduce near-term maturities and overall leverage, thereby providing a robust financial foundation for the transitioning capital structure.¹ The cost incurred, including these premiums, is viewed in the broader context of the strategic benefits derived from a cleaner, more flexible capital structure for the two distinct entities post-separation. This proactive liability management exercise is fundamentally designed to enable a major corporate transformation.

2. Introduction to Warner Bros. Discovery's Debt Tender Offer

On June 9, 2025, Warner Bros. Discovery announced a pivotal plan to separate its WBD Streaming & Studios (WBD S&S) business into a new publicly traded company.¹ In conjunction with this significant corporate transaction, WBD launched a cash tender and consent solicitation for a substantial portion of its outstanding bonds, specifically targeting approximately $35.5 billion of its debt, excluding 2025 maturities.¹The core purpose of this tender offer is multifaceted. Primarily, it seeks to optimize WBD's capital structure ahead of the separation, aiming to reduce near-term maturities and overall leverage.¹ By proactively addressing its debt profile, WBD intends to provide a deep cash bid that facilitates the capital structure transition for both the remaining WBD Global Networks (WBD GN) and the newly formed WBD S&S entity, enabling each to pursue their distinct strategic objectives.¹ The tender is supported by a $17.5 billion committed bridge facility from J.P. Morgan, which WBD expects to refinance with permanent financing for both WBD GN and WBD S&S post-separation.¹ The total maximum cash WBD is prepared to spend across all six pools of the tender offer is capped at $14.6 billion.¹The offer is meticulously structured into six distinct pools of consideration, each with tiered priorities and specific cash caps, allowing for a targeted approach to debt management.¹ An integral component of this initiative involves consent solicitations, which are designed to remove restrictive covenants from the existing bond indentures. This mechanism is crucial for providing WBD with enhanced financial and operational flexibility. A key incentive for bondholder participation in these consent solicitations is the potential subordination of non-participating holders if a future exchange offer occurs, encouraging broader engagement in the company's liability management efforts.¹

To ensure clarity in the subsequent financial analysis, it is important to define key terms used in the context of this tender offer:

• Face Value: This refers to the principal amount of the bond, which is the exact amount of debt effectively retired from WBD's balance sheet upon repurchase.

• Offer Price/Illustrative Tender Price: This is the price, expressed as a percentage of face value, at which WBD is willing to repurchase the bonds.

• Total Consideration: This represents the full cash outflow per unit of face value, encompassing the offer price, any applicable early tender premiums (which are already factored into the illustrative prices provided in the tender document), and any additional consent fees.¹

• Debt Reduction: Quantified as the aggregate face value of bonds successfully repurchased.

• Cash Outlay: The total cash amount paid by WBD for the repurchased bonds, calculated by multiplying the face value repurchased by the total consideration percentage.

The tender offer extends beyond a simple deleveraging exercise. The explicit emphasis on consent solicitations to remove restrictive covenants and the stated goal of facilitating each entity's strategic objectives reveal a deeper, more sophisticated purpose. By proactively cleaning up the existing debt structure and freeing the company from potentially burdensome covenants, WBD is enabling greater strategic agility for both the legacy and the newly spun-off entity. This indicates that the immediate debt reduction is a necessary precursor to unlocking greater long-term value through enhanced operational and financial flexibility in a post-separation landscape. Therefore, the success of this tender should be evaluated not solely on the quantitative measure of debt reduced, but equally on the qualitative improvements to the capital structure and the strategic flexibility gained, which are crucial for the long-term success of the separated businesses.

3. Detailed Analysis of Debt Reduction by Pool

This section systematically calculates the estimated debt reduction (face value) and the associated cash outlay for each relevant tender pool. These calculations strictly adhere to the stated cash caps, priority waterfalls, and illustrative total consideration percentages provided in the tender presentation. For all Euro-denominated bonds within the tender offer, an illustrative EUR/USD exchange rate of 1 EUR = 1.08 USD will be applied for calculation purposes. It is important to note that actual financial outcomes may vary based on the prevailing exchange rate at the time of the tender's settlement.

3.1. Pool 1: Front-End Bonds

Pool 1, designated for "front-end" bonds, encompasses a total of $5,335 million in outstanding bonds and is subject to a maximum cash spend cap of $3,750 million.¹ This pool operates on a defined priority waterfall, ensuring that higher-priority bonds are repurchased first.

• Mar-26 DCL $650mm 4.9% (Priority 1): This series has an original face value of $650 million. With an illustrative total consideration of 100.48% ¹, and being designated as an "any-and-all" offer with "No Proration" ¹, WBD intends to repurchase all tendered bonds of this series.

  • Estimated Face Value Repurchased: $650.00 million.

  • Estimated Cash Outlay: $650.00 million * 100.48% = $653.12 million.

• DCL €600mm 1.9% Mar-27 (Priority 2): This series has an original face value of €600 million. At an illustrative total consideration of 99.09% ¹, and also being an "any-and-all" offer with "No Proration" ¹, all tendered bonds are expected to be repurchased. Converting the face value to USD using the assumed exchange rate: €600 million * 1.08 USD/EUR = $648.00 million.

  • Estimated Face Value Repurchased: $648.00 million (USD equivalent).

  • Estimated Cash Outlay: €600 million * 99.09% = €594.54 million, which converts to $642.10 million (USD equivalent) at the assumed exchange rate.

• WMH $4,000mm 3.755% Mar-27 (Priority 3): This series has an original face value of $4,000 million and an illustrative total consideration of 98.88%.¹ This series has a "Potential for Proration: Yes".¹

  • The remaining cash available within the Pool 1 cap is calculated as: $3,750.00 million (Total Pool Cap) - $653.12 million (P1 Outlay) - $642.10 million (P2 Outlay) = $2,454.78 million.

  • Estimated Face Value Repurchased for P3: $2,454.78 million (Remaining Cash) / 98.88% (Total Consideration) = $2,482.69 million. This amount is less than the $4,000 million outstanding, confirming proration for this series.

  • Estimated Cash Outlay: $2,454.78 million (as this is the remaining cash available within the cap).

Pool 1 Summary:

• Estimated Face Value Repurchased: $650.00 million + $648.00 million + $2,482.69 million = $3,780.69 million.

• Estimated Total Cash Outlay: $653.12 million + $642.10 million + $2,454.78 million = $3,750.00 million.

WBD's decision to designate the highest priority (Priority 1 and Priority 2) bonds in Pool 1 as "any-and-all" with "no proration potential" ¹ is a deliberate strategic choice. This approach ensures certainty for holders of the shortest-dated bonds, which are likely key targets for reducing near-term maturities and improving the debt repayment schedule. By prioritizing these specific tranches for full repurchase, WBD secures an immediate and definite deleveraging impact on its closest maturity profile, while maintaining flexibility (via proration) for larger, slightly longer-dated tranches to manage the overall cash expenditure within the pool's cap.

3.2. Pool 2: Mid-Dated Euro Tranches

Pool 2 specifically targets mid-dated Euro-denominated tranches, with a subtotal of €1,500 million in bonds and a cash spend cap of up to €800 million.¹ Both bonds within this pool share the same priority.

• €650mm 4.302% Jan-30 (Priority 1): Illustrative Total Consideration: 103.35%.¹

• €850mm 4.693% May-33 (Priority 1): Illustrative Total Consideration: 100.39%.¹

Given that both series are of equal priority and both have "Potential for Proration: Yes" ¹, the available cash (€800 million) will be allocated proportionally based on the theoretical cash required to repurchase all outstanding bonds of each series.

• Total Theoretical Cash Required if all tendered: (€650 million * 103.35%) + (€850 million * 100.39%) = €671.775 million + €853.315 million = €1,525.09 million.

• Proration Factor: €800.00 million (Cash Cap) / €1,525.09 million (Total Theoretical Cash) = 0.52455 (approximately).

Applying the proration factor:

• Estimated Face Value Repurchased for Jan-30: (€650 million * 103.35%) * 0.52455 / 103.35% = €340.96 million.

• Estimated Face Value Repurchased for May-33: (€850 million * 100.39%) * 0.52455 / 100.39% = €445.87 million.

• Estimated Cash Outlay for Jan-30: €340.96 million * 103.35% = €352.36 million.

• Estimated Cash Outlay for May-33: €445.87 million * 100.39% = €447.64 million.

Pool 2 Summary:

• Estimated Face Value Repurchased: €340.96 million + €445.87 million = €786.83 million. Converted to USD: €786.83 million * 1.08 USD/EUR = $849.78 million.

• Estimated Total Cash Outlay: €352.36 million + €447.64 million = €800.00 million. Converted to USD: €800.00 million * 1.08 USD/EUR = $864.00 million.

The inclusion of Euro-denominated bonds in the tender offer signifies WBD's comprehensive approach to managing its multi-currency debt profile.¹ The application of proration for Pool 2, where both series are of equal priority, indicates a deliberate strategy to reduce these liabilities proportionally based on the available cash cap. This proportional reduction ensures that WBD is not prioritizing one Euro tranche over another, but rather aims for a balanced reduction within this specific currency segment. This contributes to a more streamlined and potentially less volatile overall debt portfolio by reducing foreign currency exposure on the liability side, which is a key aspect of sophisticated treasury management.

3.3. Pool 3: Long-Dated DCL Bonds

Pool 3 focuses on long-dated DCL series bonds, with a subtotal of $4,968 million in outstanding bonds and a cash spend cap of up to $1,000 million.¹ This pool features a detailed priority waterfall, dictating the order of repurchase.

• $1,700mm 3.95% Mar-28 (Priority 1): This series has an original face value of $1,700 million and an illustrative total consideration of 98.16%.¹ It is explicitly "capped at $300mm cash spend amount".¹

  • Estimated Face Value Repurchased: $300.00 million (Cash Cap) / 98.16% (Total Consideration) = $305.62 million.

  • Estimated Cash Outlay: $300.00 million.

• $405mm 4.0% Sep-55 (Priority 2): Original face value of $405 million, illustrative total consideration of 57.94%.¹ "No Proration" is indicated for this series.¹

  • Estimated Face Value Repurchased: $405.00 million.

  • Estimated Cash Outlay: $405.00 million * 57.94% = $234.66 million.

• $303mm 4.65% May-50 (Priority 3): Original face value of $303 million, illustrative total consideration of 67.54%.¹ "No Proration" is indicated for this series.¹

  • Estimated Face Value Repurchased: $303.00 million.

  • Estimated Cash Outlay: $303.00 million * 67.54% = $204.64 million.

• Remaining Cash Cap for Pool 3 after P1, P2, P3: $1,000.00 million (Total Pool Cap) - $300.00 million - $234.66 million - $204.64 million = $260.70 million.

• $605mm 5.2% Sep-47 (Priority 4): Original face value of $605 million, illustrative total consideration of 74.69%.¹ This series has "Potential for Proration: Yes".¹

  • Estimated Face Value Repurchased: $260.70 million (Remaining Cash) / 74.69% (Total Consideration) = $349.04 million.

  • Estimated Cash Outlay: $260.70 million.

• Priorities 5-9: The remaining series in Pool 3 (from $279mm 5.3% May-49 to $664mm 6.35% Jun-40) will not be repurchased as the $1,000 million cash cap for Pool 3 is fully exhausted at Priority 4.¹

Pool 3 Summary:

• Estimated Face Value Repurchased: $305.62 million + $405.00 million + $303.00 million + $349.04 million = $1,362.66 million.

• Estimated Total Cash Outlay: $300.00 million + $234.66 million + $204.64 million + $260.70 million = $1,000.00 million.

Pool 3 illustrates a highly granular and optimized approach to managing long-dated debt. WBD sets specific sub-caps for certain priority bonds (e.g., the $300 million cash spend for the Mar-28 DCL).¹ Subsequently, it allows for the full repurchase of other, often deeply discounted, long-dated bonds (e.g., Sep-55, May-50, which had pre-announcement prices of 54.35% and 62.69% respectively) ¹ before reintroducing proration for subsequent priorities. This indicates a meticulous balance between retiring specific, strategically important tranches and taking advantage of market discounts to maximize face value reduction per dollar spent. This detailed prioritization strategy enables WBD to target specific maturities or bond characteristics (such as deeply discounted bonds) for retirement, thereby maximizing the face value reduction achieved for certain tranches while diligently managing the overall cash budget allocated to the pool. This represents a highly sophisticated and financially efficient approach to liability management.

3.4. Pool 4: Long-Dated WMH Bonds

Pool 4 represents the largest component of the tender offer, targeting long-dated WMH series bonds with a subtotal of $19,301 million in outstanding bonds and a substantial cash spend cap of up to $8,000 million.¹ This pool also follows a strict priority waterfall.

• $5,000mm 4.279% Mar-32 (Priority 1): Original face value of $5,000 million, illustrative total consideration of 87.51%.¹ This series is explicitly "capped at $1,750mm cash spend".¹

  • Estimated Face Value Repurchased: $1,750.00 million (Cash Cap) / 87.51% (Total Consideration) = $1,999.77 million.

  • Estimated Cash Outlay: $1,750.00 million.

• $3,000mm 5.391% Mar-62 (Priority 2): Original face value of $3,000 million, illustrative total consideration of 70.31%.¹ "No Proration" is indicated for this series.¹

  • Estimated Face Value Repurchased: $3,000.00 million.

  • Estimated Cash Outlay: $3,000.00 million * 70.31% = $2,109.30 million.

• $7,000mm 5.141% Mar-52 (Priority 3): Original face value of $7,000 million, illustrative total consideration of 71.85%.¹ This series has "Potential for Proration: Yes".¹

  • Remaining Cash Cap for Pool 4 after P1, P2: $8,000.00 million (Total Pool Cap) - $1,750.00 million - $2,109.30 million = $4,140.70 million.

  • Estimated Face Value Repurchased: $4,140.70 million (Remaining Cash) / 71.85% (Total Consideration) = $5,763.09 million.

  • Estimated Cash Outlay: $4,140.70 million.

• $4,301mm 5.05% Mar-42 (Priority 4): This series will not be repurchased as the $8,000 million cash cap for Pool 4 is fully exhausted at Priority 3.¹

Pool 4 Summary:

• Estimated Face Value Repurchased: $1,999.77 million + $3,000.00 million + $5,763.09 million = $10,762.86 million.

• Estimated Total Cash Outlay: $1,750.00 million + $2,109.30 million + $4,140.70 million = $8,000.00 million.

Pool 4 is allocated the largest cash spend ($8.0 billion) and targets the largest subtotal of bonds ($19.3 billion) within the tender offer.¹ The resulting significant face value reduction achieved in this pool ($10.76 billion) for an $8.0 billion outlay clearly indicates that WBD is primarily leveraging this tender to address a substantial portion of its long-dated WMH debt. Furthermore, the bonds in this pool are being retired at a notable discount to their face value (e.g., Mar-62 at 70.31%, Mar-52 at 71.85% of par) ¹, which effectively maximizes the face value reduction per dollar spent. This pool represents the core of WBD's deleveraging strategy. Its successful execution will have the most material impact on WBD's overall debt maturity profile and leverage ratios, significantly improving the company's financial health and flexibility for the upcoming separation.

3.5. Pool 5: TWX Series Bonds

Pool 5 encompasses various TWX series bonds, totaling a subtotal of $946 million.¹ This pool is characterized by "Any-and-all offers," with no proration indicated for any of its series.¹

• $156mm 8.3% Jan-36: Original face value of $156 million. The illustrative tender price is 131.71%.¹

  • Estimated Face Value Repurchased: $156.00 million.

  • Estimated Cash Outlay: $156.00 million * 131.71% = $205.47 million.

• $17mm 6.85% Jan-26: Original face value of $17 million. The illustrative tender price is 101.25%.¹

  • Estimated Face Value Repurchased: $17.00 million.

  • Estimated Cash Outlay: $17.00 million * 101.25% = $17.21 million.

• Remaining TWX Notes (Total $946mm - $156mm - $17mm = $773mm): These remaining TWX notes are tendered at a fixed price of par (100.00%).¹

  • Estimated Face Value Repurchased: $773.00 million.

  • Estimated Cash Outlay: $773.00 million * 100.00% = $773.00 million.

Pool 5 Summary:

• Estimated Face Value Repurchased: $156.00 million + $17.00 million + $773.00 million = $946.00 million.

• Estimated Total Cash Outlay: $205.47 million + $17.21 million + $773.00 million = $995.68 million.

Pool 5 primarily targets TWX series bonds, which are likely legacy debt from the Time Warner acquisition. A notable characteristic of some of these bonds is their high coupon rates (e.g., 8.3% Jan-36, 7.625% Apr-31).¹ WBD is demonstrating a willingness to pay a significant premium (e.g., 131.71% for the 8.3% bond) to retire these specific tranches. Retiring high-coupon debt, even at a premium to its face value, is a financially prudent move, especially in an environment where WBD can refinance its debt at a lower effective rate. This strategy directly reduces future interest expense, leading to improved profitability and cash flow. The "any-and-all" nature for these smaller, high-coupon tranches suggests a strong strategic desire to eliminate these potentially costly legacy liabilities and streamline the interest cost structure.

3.6. Pool 6: Mid-Dated Consent-Only Bonds

Pool 6 comprises mid-dated bonds with a subtotal of $3,250 million.¹ However, this pool is explicitly described as "Standalone consent solicitations; no tender offer".¹ As this pool does not involve the repurchase of bonds, it contributes $0 to debt reduction via this tender offer. While consenting investors are offered a "Future Junior Lien / Cash Offer Option" ¹, this mechanism does not constitute a direct debt repurchase as part of the immediate tender.The deliberate exclusion of a tender offer for Pool 6, despite its substantial size ($3.25 billion), is a strategic decision. Instead, WBD is offering consent fees to obtain bondholder consent for covenant removal and providing a future junior lien exchange option.¹ This indicates that for these specific mid-dated bonds, the strategic priority is to gain financial flexibility and potentially re-tier the debt structure post-separation, rather than achieving immediate principal reduction. This highlights a nuanced and sophisticated liability management approach. WBD is selectively targeting different debt tranches for distinct objectives. For some, the goal is outright debt reduction; for others, it is about modifying existing terms and improving structural subordination, which is crucial for the optimal functioning of the post-separation entities.

Detailed Breakdown of Estimated Debt Repurchase by Series

The following table provides a comprehensive breakdown of the estimated debt repurchase and associated cash outlays for each bond series included in the tender offer pools.

Note: Series marked with an asterisk () indicate bonds that were part of the pool's total outstanding but were not repurchased due to cash cap limitations and priority waterfalls. USD equivalents for Euro bonds are provided in parentheses.*

4. Consolidated Debt Reduction and Financial Impact

This section aggregates the estimated debt reduction and cash outlay from all relevant tender pools, providing a comprehensive view of the financial impact of the tender offer on WBD's capital structure.

Total Estimated Debt Reduction (Face Value)

The total estimated face value of debt repurchased is the summation of the estimated face values of bonds acquired from Pools 1, 2, 3, 4, and 5.

• Pool 1: $3,780.69 million

• Pool 2: $849.78 million (USD equivalent)

• Pool 3: $1,362.66 million

• Pool 4: $10,762.86 million

• Pool 5: $946.00 million

• Grand Total Estimated Debt Reduction: $17,701.99 million

Total Estimated Cash Outlay

This represents the total cash WBD is estimated to spend across Pools 1, 2, 3, 4, and 5.

• Pool 1: $3,750.00 million

• Pool 2: $864.00 million (USD equivalent)

• Pool 3: $1,000.00 million

• Pool 4: $8,000.00 million

• Pool 5: $995.68 million

• Grand Total Estimated Cash Outlay: $14,609.68 million

This aggregated cash outlay of approximately $14.61 billion aligns very closely with the stated "Up to $14.6bn cash spend across six separate pools" ¹, confirming the calculations are consistent with the overall tender cap. The minor difference is attributable to rounding in intermediate calculation steps.

Net Gain on Debt Extinguishment

This metric reflects the accounting impact of the tender offer, calculated as the difference between the total face value of debt retired and the total cash outlay.

• Calculation: $17,701.99 million (Total Face Value Retired) - $14,609.68 million (Total Cash Outlay) = $3,092.31 million gain.

It is a critical observation that despite WBD explicitly stating that "Offers are priced at a significant premium to market, pre-announcement" ¹ and that "Premiums to market pre-announcement prices" were offered ¹, the overall calculation reveals a substantial gain on debt extinguishment. This apparent contradiction is resolved by understanding that many of the long-dated bonds, particularly those in Pools 3 and 4, were trading at deep discounts to their face value prior to the tender announcement (e.g., DCL Sep-55 at 54.35%, WMH Mar-62 at 64.98%).¹ While WBD paid a premium

over these depressed market prices to incentivize tendering, they are still effectively buying back debt at a significant discount to its par value. This significant gain on extinguishment will be recognized as a positive non-operating item on WBD's income statement, favorably impacting reported earnings. More importantly, it underscores the financial efficiency of the tender in reducing the principal amount of debt for less than its par value, even with the incentives offered to bondholders. This represents a substantial positive financial outcome in addition to the strategic benefits of deleveraging.

Summary of Estimated Debt Reduction and Cash Outlay by Tender Pool

The following table summarizes the estimated debt reduction and cash outlay for each tender pool.

Discussion of Overall Impact on WBD's Leverage and Capital Structure

The successful tender offer is projected to reduce WBD's approximately $35.5 billion of outstanding bonds by a significant $17.7 billion (face value). This represents a substantial deleveraging effort. This reduction will materially decrease the overall principal amount of debt and alleviate pressure from near-term maturities, thereby improving the company's debt maturity profile and enhancing its financial flexibility in preparation for the upcoming separation. The successful funding of this tender through a committed bridge facility demonstrates WBD's robust financial capabilities and its ability to execute complex liability management transactions to optimize its capital structure.¹ The tender also strategically addresses the remaining debt: non-consenting notes and those not repurchased due to proration will remain at WBD GN post-separation ¹ and may face subordination through future exchange offers ¹, further incentivizing bondholder participation in future liability management initiatives.

5. Key Considerations and Assumptions

The analysis presented relies on specific parameters and assumptions outlined in the tender offer document. Understanding these considerations is crucial for interpreting the estimated debt reduction and financial impact.

• Illustrative Nature of Figures: It is important to acknowledge that all financial figures presented in the tender offer document, particularly the "Illustrative Tender Price" and "Illustrative Total Consideration," are based on market data as of June 6, 2025.¹ Actual prices and bondholder participation rates may differ from these illustrative figures, which could ultimately impact the final debt reduction achieved and the total cash outlay.

• Impact of Proration: The calculations in this analysis assume full participation from bondholders up to the specified cash caps for each pool and strict adherence to the stated priority waterfalls. In reality, actual proration rates will be determined by the precise volume of bonds tendered for each series, potentially leading to variations from these estimates.

• Currency Conversion: The EUR/USD exchange rate of 1.08 used for Euro-denominated bonds is an assumption made for the purpose of this analysis. Fluctuations in foreign exchange rates between the calculation date and the actual settlement date will affect the precise USD equivalent of the Euro-denominated debt reduction and cash outlay.

• Future Junior Lien / Cash Offer Option: While this option is offered to consenting bonds that are not repurchased (due to proration) and to consent-only bonds ¹, its potential impact on WBD's

  future debt structure (e.g., conversion to junior lien notes) is distinct from the immediate debt reduction achieved by this tender offer. It represents a separate, albeit related, future liability management tool for WBD.

The repeated use of terms like "illustrative" and explicit mention of "potential for proration" across multiple pools ¹ signify that the actual outcome of the tender offer is not fully guaranteed. It depends on various factors including market participation levels and WBD's final execution decisions. Furthermore, the "Future Junior Lien / Cash Offer Option" ¹ introduces a layer of optionality, both for WBD (in deciding whether to make the offer) and for bondholders (in choosing between an exchange or cash payment). The reported debt reduction figures are therefore

estimates derived from the stated parameters of the offer. The precise, final impact on WBD's debt profile and financial statements will only be known after the tender's settlement, as it will be influenced by real-time market dynamics, bondholder behavior, and WBD's ultimate choices within the defined framework of the offer. This inherent variability introduces a degree of complexity and execution risk to the transaction.

6. Conclusion

The analysis indicates that Warner Bros. Discovery's debt tender offer is poised to achieve a substantial debt reduction of approximately $17,701.99 million in face value, with an estimated total cash outlay of $14,609.68 million. This strategic initiative is projected to result in an accounting gain on debt extinguishment of approximately $3,092.31 million, demonstrating the financial efficiency of repurchasing deeply discounted long-dated bonds, even when offering premiums over their pre-announcement market prices.

The tender offer represents a pivotal and strategic step in WBD's ongoing capital structure optimization efforts. It is poised to significantly reduce the company's overall debt burden and alleviate pressure from near-term maturities, thereby strengthening its financial position. Beyond immediate deleveraging, the tender, particularly through its integrated consent solicitations, is critical for enabling the successful strategic separation of WBD Streaming & Studios. By modifying existing debt covenants and streamlining the debt profile, WBD is positioning both the remaining WBD Global Networks and the new WBD S&S entity for future growth, enhanced financial stability, and greater operational flexibility in their respective market segments. This comprehensive liability management exercise underscores WBD's proactive approach to financial stewardship in anticipation of a transformative corporate event.

1. Warner-Bros-Discovery-Debt-Tender-Presentation-06-09-25-2.pdf