Warner Bros. Discovery, Inc. (WBD) is pushing forth with plans to save $3 billion after Chief Financial Officer (CFO) Gunnar Wiedenfels stated 2022 would be a “messy” year. Citing people familiar with the matter, Reuters reports that the media giant is poised to cut nearly 30% of its global sales team.
The cut is poised to affect about 1,000 people, as the global advertising unit has about 3,000 members. According to people familiar with the matter, WBD has already started offering affected members an opportunity to leave the company voluntarily.
The layoffs come hot on the heels of Warner Bros. Discovery forging a $43 billion merger between Discovery and WarnerMedia. The business combination is believed to have resulted in an overlap in duties. Sales are one area where Warner Bros. Discovery could be seeing duplicative positions, thus the move to reduce redundancy. In addition, the cuts come at a time when the streaming industry is under immense pressure.
Wall Street has already warned of a broader industry slowdown due to inflationary pressures that have significantly impacted consumer spending. In addition, the challenging business environment amid concerns about the global economy has forced companies to resort to drastic measures. Coinbase Global (COIN), Redfin (RDFN), and Compass (COMP) are the other companies that have announced plans to layoff staff.
Wall Street’s Take
The Street is optimistic about Warner Bros. Discovery stock going by the Moderate Buy consensus rating, based on seven Buys, six Holds and one Sell. In addition, the average Warner Bros. Discovery price target of $32.2 implies a 130% upside potential from current levels.
A push to slash the global sales team should allow Warner Bros. Discovery to reduce redundancy following the $43 billion merger. The layoffs, as part of a $3 billion cost reduction drive, should also enhance efficiency and bolster margins.
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