Warner Bros. Discovery (WBD.O) announced plans to split into two separate publicly traded companies, dividing its studios and streaming division from its declining cable television business. The move, intended to help the company compete more effectively in the streaming age, marks a reversal of the 2022 merger between WarnerMedia and Discovery and is part of a broader trend undoing years of media consolidation.
The new company focusing on streaming and studios will include major assets such as Warner Bros., DC Studios, and HBO Max—considered WBD’s most valuable content holdings. The cable networks business, which will retain up to a 20% stake in the streaming entity, will encompass CNN, TNT Sports, and Bleacher Report.
CEO David Zaslav will lead the streaming and studios division, while CFO Gunnar Wiedenfels will take charge of the cable networks arm. The tax-free transaction is expected to close by mid-2026. Zaslav explained the decision, stating that separating the businesses had become the most viable path forward given the changing media landscape.
Most of WBD’s $38 billion debt will be carried by the networks company. To aid in the restructuring, WBD has secured a $17.5 billion bridge loan from J.P. Morgan. Meanwhile, bondholders are pushing back on a proposal that would limit their ability to act collectively, with law firm Akin Gump reportedly organizing the effort, according to the Wall Street Journal.
WBD’s shares initially jumped after the announcement but later dropped nearly 3%, continuing a downward trend since the WarnerMedia-Discovery merger. The stock has fallen around 60% amid challenges including shrinking cable subscriptions, stiff competition in streaming, and concerns over debt.
Analysts remain skeptical. Brian Wieser, CEO of Madison and Wall, warned that the split might prioritize financial maneuvers over operational improvements, potentially weakening both new entities. Media veteran Jonathan Miller noted that after years of expected consolidation under the Trump administration, companies now appear to be focused on internal restructuring instead.
Other media firms are making similar moves. Comcast is spinning off most of its NBCUniversal cable assets into a new company, Versant, while Lionsgate completed its split between Starz and its studio business in May.
At WBD’s recent shareholder meeting, nearly 60% voted against the company’s executive pay packages, including Zaslav’s $51.9 million compensation for 2024, signaling shareholder discontent.
WBD has struggled with falling ratings and revenue across its cable networks as viewers migrate to streaming. Analysts believe the separation could refocus management and help Warner Bros. appeal more broadly to investors.
The company has been positioning HBO Max as a premium content platform, reviving its brand and aiming for international growth. The service had 122 million subscribers as of March and targets over 150 million by the end of 2026—still well behind Netflix and Disney’s combined totals.
Looking ahead, industry experts anticipate more consolidation. Comcast’s network spinoff could potentially merge with WBD’s cable assets, while the streaming and studio division might align with services like Comcast’s Peacock. However, future mergers would face scrutiny from U.S. antitrust regulators concerned about consumer and labor impacts.
Zaslav has hinted that a second Trump presidency could create a more favorable deal-making environment, referencing past DOJ opposition to mergers such as AT&T–Time Warner.
Meanwhile, J.P. Morgan and Evercore are advising WBD on the separation, with legal guidance from Kirkland & Ellis.
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