Warner Bros. Discovery said it would split into two publicly traded companies, separating its studio and streaming businesses from the faded cable network as HBO and CNN's parent companies hope to improve competition in the streaming era.
The breakup is the latest dissolution of a media merger over decades that created global businesses that cover content creation, distribution, and in some cases telecommunications. It relaxed the previous merger of Warnermedia and Discovery in 2022, aiming to grow the streaming and studio business without reducing network units.
The new streaming company will include Warner Bros., DC Studios and HBO Max (the crown jewelry of Warner Bros. Discovery Entertainment Library).
The networking department will house CNN, TNT Sports and Bleacher reports, which will own up to 20% of the shares.
CEO David Zaslav will lead the streaming and studio units, while CFO Gunnar Wiedenfels will be responsible for the network units. The separation will be structured in a tax-free transaction structure and is expected to be completed by mid-2026.
“We continue to analyze how our industry grows,” Zaslav told investors. “The right path is becoming clearer…Splitting global networks and streaming and studios into two independent publicly traded companies.”
Most of the company's debt will be held by global network companies. As of March, Warner Bros. found a total debt of $38 billion. The company said it received a $17.5 billion U.S. Bridge loan from JP Morgan, which will be used to restructure its debt.
Within hours after the announcement, the stock price fell nearly 3% at noon.
Inventory since merger
Warner Bros. Discovery's stock has suffered losses from cable users since its merger, hurt by tough streaming competition and investors' focus on the direction of debt companies.
Brian Wieser, CEO of Madison and Wall, a consulting firm for media, technology and other companies, said the split will not address the potential weaknesses of Warner Bros. Discovery.
If anything, Wiesel said, “this could make them worse because they prefer financial engineering rather than focusing on improving existing operations or seeking new growth opportunities… Such a deal can hinder both parties to the company until the deal is over.”
Media executives initially expected a wave of consolidation under the administration of U.S. President Donald Trump, although that has not been passed.
“It proved harder than anyone could think for a number of reasons,” said Jonathan Miller, who now serves as CEO of Integrated Media. “It seems that the characteristic of this year will be how we keep our house organized and do our best.”
Comcast rotates most of its NBCuniversal cable network portfolio to a standalone company, Versant. Lions Gate Entertainment completed the separation of its Starz cable network from its film and television studios in May.
An experienced media executive who asked not to be named said the disruption of this media group could lay the foundation for further deals.
Last week, at the annual meeting, about 59% of Warner Bros. found shareholders voted against the executive salary package, which included Zaslav’s $51.9 million U.S. 2024 compensation, indicating dissatisfaction.
Like other entertainment companies, Warner Bros. finds it is struggling to get ratings and revenues for its wired networks. Consumers have been abandoning paid TV subscriptions to support streaming services.
