Published by Global Banking and Finance Review
Posted on June 9, 2025
By Aditya Soni and Jaspreet Singh
(Reuters) -Warner Bros Discovery said it would split into two publicly traded companies, separating its studios and streaming business from its fading cable television networks as the parent of HBO and CNN looks to compete better in the streaming era.
The breakup announced on Monday is the latest sign of the great unraveling of decades of media consolidation that have created global conglomerates spanning content creation, distribution and in some cases, telecommunications.
It unwinds WarnerMedia and Discovery's 2022 merger, giving the streaming and studios business more room to scale without being weighed down by the declining networks unit.
The new streaming-and-studios company will include Warner Bros, DC Studios and HBO Max - the crown jewels of WBD's entertainment library.
The networks unit, which will hold up to a 20% stake in its counterpart, will house CNN, TNT Sports and Bleacher Report.
CEO David Zaslav will lead the streaming and studios unit after the breakup, while CFO Gunnar Wiedenfels will head the networks unit. The separation will be structured as a tax-free transaction and is expected to be completed by mid-2026.
"By operating as two distinct and optimized 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.
Majority of the company's debt would be held by the global networks company. WMD had a gross debt of $38 billion as of March.
Shares of WBD rose 8% in premarket trading, but the stock remains down nearly 60% since the merger, hurt by cable subscriber loss, tough streaming competition and investor concerns over the debt-laden company's direction.
Last week, about 59% of WBD shareholders voted against executive pay packages, including Zaslav's $51.9 million 2024 compensation, at the annual shareholder meeting.
"WBD is a hotchpotch of businesses which have failed to win over the market. (With the split) Warner Bros has a better chance to gain broader investor interest and focus management on fewer things," said AJ Bell analyst Dan Coatsworth.
WBD had laid the groundwork for a sale or spin-off of its declining cable TV assets in December by announcing a separation from its streaming and studio operations.
The split comes as WBD tries to position its streaming service as a premium destination with titles such as "The Last of Us" after initially betting that a blend of HBO dramas and Discovery's lifestyle content would broaden its appeal.
It revived the HBO Max branding last month to aid the global expansion of its streamer that had about 122 million subscribers as of March and expects its subscriber base to exceed 150 million by the end of 2026.
That would still trail Netflix's more than 300 million subscribers and the combined 181 million subscribers of Disney+ and Hulu.
MORE DEALS
Some analysts said the breakup could set the stage for more deals in the media sector, pointing to Comcast's plan to spin off most of its cable networks, including MSNBC and CNBC.
"The outlook for the cable network business broadly is pretty ugly and I assume there will be consolidation there," said Jeff Wlodarczak, analyst at Pivotal Research Group.
He said WBD's cable networks could be a logical fit for Comcast's upcoming cable spinoff, while its streaming and studios business might combine with another player such as Comcast's Peacock.
Any merger will require approval from Trump administration's antitrust regulators who have signaled they intend to focus on mergers that lower competition in ways that harm consumers or workers.
Zaslav has said he expects a more deal-friendly environment under a Trump administration. But during his first term, Trump repeatedly attacked CNN, and his Department of Justice moved to block the AT&T–Time Warner merger.
WBD said on Monday it secured a $17.5 billion bridge loan from J.P. Morgan that it would use to restructure its debt.
J.P. Morgan and Evercore are advising WBD on the deal, while Kirkland & Ellis is serving as legal counsel.
(Reporting by Aditya Soni and Jaspreet Singh in Bengaluru, additional reporting by Akash Sriram; Editing by Arun Koyyur)
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