Credit ratings agency Fitch Ratings Wednesday downgraded Warner Bros Discovery to junk status following the company's announced split-up earlier this week, as investors weigh the deal's likely impact on holders of its debt.

"The downgrade reflects Fitch's expectation post-transaction, WBD will be smaller and less diversified in a secularly declining industry and have elevated leverage," Fitch analysts wrote.

"Depending on the final capital structure, a multi-notch downgrade is possible," they added.

On Monday, the entertainment conglomerate announced plans to split into two publicly traded companies: one anchored by its Warner Bros Pictures, DC Studios, and growing HBO Max streaming service, while the other will serve as home to its legacy cable channels, including CNN and TNT.

The split-up, expected to close in mid-2026, aims to help the current company better handle its immense $37 billion debt resulting from the 2022 merger of Warner Bros and Discovery.

• CNN to Join New Company, Spin Off From Warner Discovery