In a dramatic restructuring that sent its shares soaring over 10% on Monday, Warner Bros. Discovery (WBD) announced plans to break itself into two standalone, publicly traded companies.
One will house the company’s prized assets—HBO, Warner Bros. Studios, and the HBO Max streaming platform—while the other will inherit its fading cable operations, including CNN and TNT.
The move comes just two years after the 2022 merger of WarnerMedia and Discovery, which created the current conglomerate. But with investor sentiment soured by steep subscriber losses in cable, mounting debt, and streaming growing pains, executives say the time has come to chart two separate paths.
The split, structured as a tax-free transaction and expected to close by mid-2026, will create a new “Streaming & Studios” entity led by current CEO David Zaslav, while Chief Financial Officer Gunnar Wiedenfels will helm the newly minted “Global Networks,” home to the cable portfolio.
Streaming Ambitions Get Breathing Room
The Streaming & Studios company will become the flagship for Warner’s most valuable intellectual property: the DC film universe, HBO’s premium drama slate, and one of the largest film and television libraries in the industry. It will also inherit the company’s push for global growth, with HBO Max recently rebranded and now targeting over 150 million subscribers by 2026—still a long way from Netflix’s (NFLX) 300 million-plus, but a meaningful goal.
The Streaming & Studios company will become the flagship for Warner’s most valuable intellectual property: the DC film universe, HBO’s premium drama slate, and one of the largest film and television libraries in the industry. It will also inherit the company’s push for global growth, with HBO Max recently rebranded and now targeting over 150 million subscribers by 2026—still a long way from Netflix’s (NFLX) 300 million-plus, but a meaningful goal.
Zaslav emphasized the strategic freedom that comes with the split. “By operating as two distinct and optimized companies, we are empowering these iconic brands to compete more effectively in today’s evolving media landscape,” he said in a statement.
Investors appeared to agree, at least initially. Shares of WBD jumped as high as $10.92 in early trading on Monday—about a 12% gain—though still far below the stock’s post-merger highs. Since the creation of WBD in April 2022, the company has lost nearly 60% of its value, weighed down by $38 billion in gross debt and skepticism over its hybrid cable-streaming model.
Global Networks: A Sinking Ship or Cash Cow?
While the new streaming company may benefit from unshackled growth, the outlook for Global Networks is far more complicated. The division will include CNN, TNT Sports, Discovery Channel, Discovery+, and hundreds of digital and free-to-air channels spanning more than 200 countries. But it also assumes the bulk of the company's debt, and it must contend with a structurally declining business model.
Cable television—once the media industry's profit engine—is facing rapid audience erosion and plunging ad revenue. In the first quarter alone, the networks segment saw adjusted EBITDA fall by 15%, and analysts warn the worst may be yet to come.
Still, the cable business remains a cash generator, and it will retain a 20% stake in the streaming company—a stake that could be monetized to accelerate debt repayment. Warner Bros. has also secured a $17.5 billion bridge loan from JPMorgan to bolster its financial flexibility ahead of the breakup.
Yet critics question whether a rebrand and financial engineering can reverse the tide. “Getting out of linear cable networks sounds like a great idea,” said LightShed Partners’ Rich Greenfield, “but it honestly feels like legacy media executives all waited far too long to hit the eject button.”
While the new streaming company may benefit from unshackled growth, the outlook for Global Networks is far more complicated. The division will include CNN, TNT Sports, Discovery Channel, Discovery+, and hundreds of digital and free-to-air channels spanning more than 200 countries. But it also assumes the bulk of the company's debt, and it must contend with a structurally declining business model.
Cable television—once the media industry's profit engine—is facing rapid audience erosion and plunging ad revenue. In the first quarter alone, the networks segment saw adjusted EBITDA fall by 15%, and analysts warn the worst may be yet to come.
Still, the cable business remains a cash generator, and it will retain a 20% stake in the streaming company—a stake that could be monetized to accelerate debt repayment. Warner Bros. has also secured a $17.5 billion bridge loan from JPMorgan to bolster its financial flexibility ahead of the breakup.
Yet critics question whether a rebrand and financial engineering can reverse the tide. “Getting out of linear cable networks sounds like a great idea,” said LightShed Partners’ Rich Greenfield, “but it honestly feels like legacy media executives all waited far too long to hit the eject button.”
An Industry in Transition
Warner’s breakup follows a broader trend in legacy media. Comcast plans to spin off its cable networks into a separate company, Versant, later this year. Lions Gate recently completed a similar split, while Disney (DIS) has explored options to divest its linear TV assets.
Warner’s breakup follows a broader trend in legacy media. Comcast plans to spin off its cable networks into a separate company, Versant, later this year. Lions Gate recently completed a similar split, while Disney (DIS) has explored options to divest its linear TV assets.
The pressures driving these decisions are clear: traditional television is hemorrhaging viewers, while streaming—though costly and fiercely competitive—offers the promise of scale and recurring revenue. Yet success in streaming is no guarantee. Consumers are tightening budgets, and platforms like HBO Max must now fight to keep subscribers while competing against deep-pocketed rivals like Netflix and Disney.
Meanwhile, the prospect of mergers looms large. Analysts speculate WBD’s streamlined streaming business could become an acquisition target, possibly for Comcast’s Peacock, depending on the political and regulatory environment. Zaslav, for his part, has suggested a second Trump term would be more favorable to dealmaking.
Conclusion: A Risky Reboot
Warner Bros. Discovery’s planned split is as much an admission of past missteps as it is a blueprint for the future. By dismantling the very empire it spent billions to build, WBD is hoping to salvage value from two diverging paths—one with clear potential in streaming, the other a legacy burden increasingly hard to justify.
Investors have applauded the move—for now. But with the streaming market still uncertain and the cable model in freefall, the company’s long-term success depends on much more than breaking itself in two. For Warner, this is not just a restructuring—it’s a reinvention in a media world that’s moving faster than ever.
Investors have applauded the move—for now. But with the streaming market still uncertain and the cable model in freefall, the company’s long-term success depends on much more than breaking itself in two. For Warner, this is not just a restructuring—it’s a reinvention in a media world that’s moving faster than ever.
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