Warner Bros Discovery announced that it would be splitting itself into two companies—'Streaming and Studios', and 'Global Networks'—in order to better adapt to an era of streaming services.
The parent company of HBO, CNN and Max will see CEO David Zaslav heading the 'Streaming and Studios' division and CFO Gunnar Wiedenfels heading the other division, a press release dated June 9 said.
“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,” explained Zaslav.
Amid a gradual shift in viewership from the once-lucrative cable TV to streaming services, the split is expected to help the company focus and build upon these two verticals separately.
"At Global Networks, we will focus on further identifying innovative ways to work with distribution partners to create value for both linear and streaming viewers globally while maximizing our network assets and driving free cash flow,” explained Wiedenfels, in relation to the slow decline of cable TV.
This diversification is also expected to aid each company in attracting its own specific shareholder base.
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The company had hinted at the separation as early as last December, laying the groundwork for a possible sale or spin-off of its declining cable TV assets, which have now been consolidated under 'Global Networks'. This further opens up the possibility for it to align with Comcast, which is similarly spinning off most of its cable TV networks, such as MSNBC and CNBC.
The press release also explained that Warner Bros' debt portfolio will be funded by a committed bridge facility of $17.5 billion provided by J.P. Morgan. The bridge facility is expected to be re-financed prior to the separation—set to be completed by mid-2026—also assisted by Global Network's 20% stake in Streaming and Studios.
The separation is now subject to closing and other conditions, including final approval by the Warner Bros. Discovery Board, receipt of tax opinions and/or a private letter ruling from the Internal Revenue Service.
J.P. Morgan and Evercore are serving as financial advisors to Warner Bros. Discovery and Kirkland & Ellis LLP is serving as legal counsel.
