Warner Bros. Discovery plans to separate linear networks and streaming businesses
Warner Bros. Discovery plans to separate linear networks and streaming businesses
The move resembles a recent plan from Comcast to split most of its cable channels from the rest of its business.
Warner Bros. Discovery doesn’t want to be left behind in the world of new media. As announced by WBD on Thursday, the company is on the cusp of a major shakeup; it plans to separate itself into two separate business units. One will be dedicated to the company’s linear networks like CNN, Magnolia Network, TNT, and others, while the other will house the Max streaming service and the Warner Bros. movie studio.
Key Details:
- The split is set to be completed by mid-2025.
- The shakeup could allow WBD to sell off its linear networks while focusing on building its streamer.
- Comcast recently announced similar plans to separate its cable channels from the rest of its business.
According to WBD CEO David Zaslav, the reorganization of the company is intended to more effectively “[align] our organization and enhances our flexibility with potential future strategic opportunities across an evolving media landscape, help us build on our momentum and create opportunities as we evaluate all avenues to deliver significant shareholder value.”
The split is intended to be finished by mid-2025. When it is complete, it could make it much easier for WBD to sell off underperforming channels in its portfolio, either individually or as a unit. The company was forced to take a $9.1 billion write-down on its cable networks after the departure of live NBA games from TNT earlier this year, an admission that they aren’t worth what they once were.
WBD still carries a huge long-term debt load of over $30 billion, stemming from the merger of WarnerMedia and Discovery in 2022. That heavy burden caused Bank of America analyst Jessica Reif Ehrlich to suggest that WBD should spin off Max and the movie studio to continue investing in those areas while allowing the cable networks to carry the debt.
The company is now pursuing a strategy that’s highly similar to Ehrlich’s advice. It also resembles the decision announced by Comcast in November to spin off most of its cable channels into a standalone entity within the NBCUniversal portfolio, which can acquire or sell cable assets as it sees fit.
It wouldn’t be surprising to see Disney make a similar move in the near future. In 2023, Disney CEO Bob Iger said publicly that he didn’t view linear channels as “core” to the company’s business, and that they were a “no-growth” industry. Iger has backed off those types of comments lately, but with Comcast and WBD making spin-off movies, he may decide he doesn’t want Disney to be left behind.
HBO Max
HBO Max is a subscription video streaming service that gives access to the full HBO library and exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Within HBO Max, B/R Sports allows users to watch live NBA, MLB, NHL, March Madness, and NASCAR events.