Warner Bros. Discovery announced the media giant will divide into two new publicly traded companies, with one consisting of its cable networks such as CNN and TNT Sports and the second consisting of its streaming and studios business, including HBO Max and Warner Bros. Television.
In a statement on Monday, the company said current Warner Bros. Discovery CEO David Zaslav will serve as president and CEO of Streaming & Studios, while Gunnar Wiedenfels, chief financial officer of Warner Bros. Discovery, will lead the cable division, called Global Networks.
The split, which the company said is expected to be completed by mid-2026, effectively unravels much of the merger that created Warner Bros. Discovery in 2022, when WarnerMedia combined with Discovery. Warner Bros. Discovery’s cable networks, like many of its rivals, have lost viewers as consumers shifted to streaming services such as Netflix, causing its stock to slump more than 60% since the merger closed more than three years ago.
Breaking the company into two new media businesses will allow each company to “pursue important investment opportunities and drive shareholder value,” Wiedenfels said in the statement.
As part of its announcement, Warner Bros. Discovery said it would focus on scaling up HBO Max, which is now in 77 markets. The company in May said its streaming business — which includes HBO Max — is on track to add 150 million subscribers by the end of 2026.
While Warner Bros. Discovery’s streaming business has performed well, Adam Crisafulli of investment advisory firm Vital Knowledge said in a note to clients that its studio business is struggling. Revenue at that unit fell 18% in the first quarter compared to the same period last year.
The company’s overall first-quarter revenue tumbled 9% to $9 billion compared with the year-earlier period, according to its most recent earnings report.
“The issue with the success of this split is the same one plaguing other media companies (including the separation underway at Comcast and the one considered but ultimately aborted at Disney) – the legacy networks businesses have poor top line growth prospects but relatively healthy profitability/cash flow, which means they generate important liquidity but are likely to garner middling valuations as standalone entities,” Crisafulli said.
New York City-based Warner Bros. did not immediately respond to a request for comment. Shares of the company were up 10% in premarket trading. The company has a market value of $24.3 billion.
The new plan to separate the businesses comes after Warner Bros. announced a structural reorganization in December.
Legacy media companies have struggled to maintain their foothold in recent years as viewers shift to alternative platforms for news and entertainment. The profit model for these outlets has also proven difficult to sustain as once-steady advertising revenue buckles, leading many companies to consolidate or restructure.
Comcast in November announced plans to spin off some of its cable networks into a new publicly traded company. Dubbed Versant, the new entity will be comprised of USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel.
Elsewhere in the media landscape, Paramount Global, which owns CBS, MTV and Nickelodeon, is going through the merger process. Skydance Media, an entertainment business launched by David Ellison, son of Oracle co-founder Larry Ellison, agreed to merge with Paramount Global in July 2024 in an $8 billion deal.
