Warner Bros Discovery announced on Monday that it would split into two companies as it seeks to better position itself for the streaming era amid declines in the conventional cable business.
The entertainment giant will break itself into two publicly traded companies: one covering “Streaming & Studios” and the other “Global Networks”. The shift, designed to enable each venture to “maximise its potential”, is expected to be completed by mid-2026, the company said.
The move, which reallocates assets such as HBO Max and CNN, is the latest reflection of how streaming is remaking a media business in which Warner Bros Discovery and other legacy players traditionally garnered considerable revenues from “bundled” cable products that many consumers are now eschewing in favour of a la carte streaming purchases.
The “Streaming & Studios” company will include the libraries of HBO and Warner Bros, studio production facilities in California and Britain, and tours and experiences. The venture will focus on growing HBO Max, now in 77 markets, said the company’s press release.
The “Global Networks” company will house Discovery, as well as CNN and TNT Sports, which are known for coverage of live events. Assets in this group currently reach 1.1 billion viewers across 200 countries and territories.
The number of paid US cable subscriptions stood at 66 million in 2024, down 37% from 2010, according to industry research firm IBIS World.
Legacy media companies have struggled with the economics of shifting flagship offerings to streaming in a profitable manner.
CNN tried in March 2022 to launch a subscription streaming service before quickly pulling the plug on the venture. However, Warner Bros has said it will revive the effort this fall.
The split allows Warner Bros Discovery’s streaming offerings “to boost content while not being weighed down by the slower-growth legacy cable business,” said Briefing.com.
“The cable channels still throw off decent good cash flow, but are struggling with high debt and declining subscribers as more consumers cut the cord.”
Media industry reinvention
Warner Bros Discovery CEO David Zaslav will serve as chief of streaming, while Warner Bros Discovery chief financial officer Gunnar Wiedenfels will lead global networks.
“By operating as two distinct and optimised companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said.
Earlier this month, shareholders voted down Zaslav’s pay package in a reflection of investor discontent with the company’s performance. The vote was non-binding.
In a conference call with analysts, Zaslav said he was committed to the global buildout of HBO Max, describing it as the “highest quality streaming service in the world” thanks to acclaimed titles such as Succession, The White Lotus and The Sopranos.
Upcoming launches include Britain, Ireland, Germany and Italy, executives said on a conference call with analysts.
Warner Bros Discovery’s plan to split itself up comes after Comcast in November announced it would spin off cable television channels, including CNBC and MSNBC, into a new company.
Disney has so far established streaming platforms such as Disney+, while discussing a new streaming service for its ESPN sports platform. The company has not spun off its legacy channels.
Warner Bros Discovery said the transaction was subject to closing conditions, including a ruling from US tax authorities that the restructuring was tax-free.
Shares of Warner Bros Discovery were down 2.2% in afternoon trading after surging in the morning.
– Agence France-Presse