Warner Bros. Discovery Splits Into Two

Warner Bros. Discovery announced that the entertainment conglomerate will be split in two — with one company housing “Streaming & Studios” and the other comprising the “Global Networks.”

The Big Picture: WBD isn’t the first entertainment giant to announce such a move — Comcast threw off its high-revenue (yet declining) cable assets into Versant, and Lionsgate separated its studio division from Starz. With streaming now the norm and efficiency the corporate Holy Grail, it was only a matter of time before the debt-laden WBD joined the divorce club.

Behind the Scenes: In 2022, Warner Bros. and Discovery joined forces… three years later, they’re kind of splitting apart.

• The Streaming & Studios division will be run by current WBD CEO David Zaslav. The company will include Warner Bros. Motion Pictures, Warner Bros. Television, HBO, HBO Max, and DC Studios (i.e., the cool, culture-making stuff).
• The Global Networks company will be run by WBD CFO and longtime Zaslav hatchet man Gunnar Wiedenfels. The company will include all the cable divisions (TNT, TBS, HGTV, Food Network, etc.), CNN, TNT Sports, Discovery+, and Bleacher Report.
• When the deal closes in mid-2026 (after usual government approvals), Global Networks will also carry the majority of WBD’s $38 billion in debt.
• Unburdened by the wieldy corporate structure of WBD, both companies will be “free and clear” to pursue M&A.

Last Transmission: WBD has been setting the stage for the split all year, recently rebranding the now-profitable Max back to HBO Max, signaling a return to a less-is-more model that values quality over scale to keep people engaged (only 25% of HBO Max viewing comes from the linear networks). Meanwhile, the networks division can engage in roll-up deals with other stranded cable brands — ones that can also absorb the debt weighing down the prestige assets.

It’s no surprise that Wall Street loved the move, sending WBD’s stock up 13%.

Prediction: Most analysts expect a sale of the streaming and studio assets to be Zaslav’s endgame, so ridding it of debt and CNN (news divisions are always problematic) may make it a much more enviable M&A target.