Warner Bros. Discovery Is Splitting Into Two Companies
Summary
Warner Bros. Discovery (WBD) has announced a significant restructuring, revealing plans to split into two independent publicly traded companies by mid-2026. This strategic move, announced earlier this week, aims to sharpen the focus and strategic flexibility of its diverse assets amidst the ongoing shift from traditional cable to streaming services.
This new company will encompass WBD's premium content creation arms, including HBO, HBO Max, the Warner Bros. Television and Motion Picture Group, DC Studios, Warner Bros. Games, and its extensive film and television libraries. David Zaslav, the current Warner Bros. Discovery CEO, will lead this division as President and CEO. This company will focus on scaling HBO Max globally and investing in world-class programming.
This new entity will house WBD's portfolio of traditional linear television networks and their digital extensions. This includes major brands like CNN, TNT Sports (in the U.S.), Discovery, and top free-to-air channels across Europe, along with digital products such as the profitable Discovery+ streaming service and Bleacher Report. Gunnar Wiedenfels, WBD's current Chief Financial Officer, will serve as President and CEO of Global Networks, focusing on maximizing network assets and driving free cash flow.
This separation effectively unravels much of the original$43 billion USD mergerthat created Warner Bros. Discovery just three years ago, a deal that left the company with significant debt. The move is seen as a direct response to the 'cord-cutting' phenomenon, which has led to declining viewership and profitability in traditional cable, while streaming services continue to attract hundreds of millions of users. By creating two distinct companies, WBD aims to allow each to pursue specific investment opportunities, leverage their unique financial profiles, and enhance shareholder value.
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Keeping the NBA would have meant more than doubling the $1.2 billion average annual rights fees TNT was paying, money it has since used for other sports rights. Despite losing the NBA, Warner was able to negotiate new long-term distribution agreements for TNT and its other cable networks at increased fees with big cable operators Comcast and Charter. That will help position the cable networks company for the future. After a tough start to the year, the Warner movie studio is on a hot streak as of late thanks to hits 'Sinners' and 'Minecraft.' The company is also releasing a much-anticipated new 'Superman' movie this summer. The company's debt has been cut by $19 billion, and most of the remaining $34 billion will sit on the global networks company, led by Warner's current finance chief Gunnar Wiedenfels. The global networks company could benefit from the cash-generating channels, but a good chunk of that ad revenue will go to paying down debt. 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