Back in April 2022, Warner Bros. Discovery came into the world with a slew of near-existential disadvantages—the company was burdened by a $55 billion debt load, a BBB credit rating, and a rocky operating environment for its array of linear TV offerings, cable channels, and Hollywood fare. The equity markets didn’t look kindly upon the Frankenmonster that David Zaslav had created through the combination of Discovery Communications, his challenged cable TV business, and the vestiges of AT&T’s Warner Media. Since the company’s formation, the stock is down 55 percent. The S&P 500 has risen 20 percent during the same time period.

And yet if WBD’s fourth quarter 2024 performance is a harbinger of things to come, the worst may be over. I’ve long argued that WBD is really a publicly traded leveraged buyout, and the key to unlocking value was the simultaneous reduction of its debt—an objective that Zaz has been highly rewarded to achieve—in combination with the hoped-for growth of its direct-to-consumer business and an increase in overall profitability. At some point, I’ve contended, the company would pay down enough debt and make enough free cash flow (and project the ability to rev it up on both fronts) that investors would look past the ominous headlines about its declining linear TV assets, its forfeiture of the rights to televise the NBA, and the vicissitudes of its film division.