Warner Bros Discovery to Split Streaming and Cable TV Units in Major Restructure
- tech360.tv
- 7 hours ago
- 3 min read
Warner Bros Discovery will separate its streaming and studios business from its cable television networks, forming two publicly traded companies in a move aimed at strengthening its position in the competitive streaming market.
The split will unwind the 2022 merger of WarnerMedia and Discovery, allowing the streaming and studios division to grow without being weighed down by the declining cable networks.
The new streaming-and-studios company will include Warner Bros, DC Studios and HBO Max, while the networks unit will house CNN, TNT Sports and Bleacher Report. The networks unit will retain up to a 20% stake in the streaming counterpart.
Chief Executive Officer David Zaslav will lead the streaming and studios company. Chief Financial Officer Gunnar Wiedenfels will head the networks unit. The separation, structured as a tax-free transaction, is expected to be completed by mid-2026.
Most of the company’s debt, which stood at USD 38 billion as of March, will be held by the global networks company. Warner Bros Discovery has secured a USD 17.5 billion bridge loan from J.P. Morgan to restructure its debt.
Shares of Warner Bros Discovery fell nearly 3% at midday, after initially rising by as much as 13% following the announcement. The stock remains down nearly 60% since the 2022 merger, impacted by cable subscriber losses, intense streaming competition and investor concerns over the company’s debt.
Analysts and industry executives expressed scepticism about the move. Brian Wieser, CEO of advisory firm Madison and Wall, said the split may worsen the company’s challenges by prioritising financial restructuring over operational improvements.
The move follows similar actions by other media companies. Comcast is spinning off most of its NBCUniversal cable networks into a new company called Versant, and Lions Gate Entertainment completed the separation of its Starz cable network from its studio business in May.
The restructuring could pave the way for future mergers. Analysts suggest Warner Bros Discovery’s cable networks could align with Comcast’s spinoff, while its streaming and studios unit might merge with another player such as Peacock.
Any future deals would require approval from U.S. antitrust regulators, who have signalled a focus on mergers that could harm consumers or workers. Industry observers warn that consolidation may lead to higher consumer prices as streaming services aim for profitability.
Zaslav has indicated he expects a more favourable deal-making environment under former President Donald Trump. During his first term, Trump opposed the AT&T–Time Warner merger and criticised CNN, now part of Warner Bros Discovery.
In December, the company announced plans to separate its streaming and studio operations. It recently revived the HBO Max brand to emphasise premium content and support global expansion. The streaming service had about 122 million subscribers as of March and aims to exceed 150 million by the end of 2026.
This would still trail Netflix’s more than 300 million subscribers and the combined 181 million subscribers of Disney+ and Hulu.
Last week, about 59% of Warner Bros Discovery shareholders voted against executive pay packages, including Zaslav’s USD 51.9 million compensation for 2024, in a non-binding advisory vote.
J.P. Morgan and Evercore are advising Warner Bros Discovery on the deal, with Kirkland & Ellis serving as legal counsel.
Warner Bros Discovery to split into two public companies by mid-2026
Streaming and studios unit to include HBO Max, Warner Bros and DC Studios
Cable networks unit to hold CNN, TNT Sports and Bleacher Report
Source: REUTERS