Hollywood's biggest studio to split as viewers switch off traditional TV
Warner Bros Discovery is splitting in two just three years after it was formed in a $43bn (£32bn) mega-merger, as viewers switch off from traditional TV.
The Hollywood media giant has announced plans to break off its streaming and studios businesses from its traditional TV networks, which include CNN and Discovery.
Bosses said the move would unlock value for shareholders and create new opportunities for growth at both businesses, including potential mergers with other legacy TV channels.
The break-up, which will create a bonanza of fees for bankers and lawyers, underscores efforts by US media giants to separate their rapidly growing streaming divisions from their declining traditional TV networks.
Comcast, the US owner of Sky, recently announced plans to split its cable networks, which include MSNBC and CNBC, from its streaming and studios businesses.
Warner Bros Discovery (WBD) was formed in 2022 through a merger between Warner Media and Discovery with the aim of creating a major media powerhouse for the streaming age.
But shares have slumped almost 60pc since then, amid tough competition and as cable viewers continue to switch off. Investors have also baulked at WBD's huge debt pile, which stood at $38bn at the end of March.
David Zaslav, the chief executive of WBD, said: 'The cultural significance of this great company and the impactful stories it has brought to life for more than a century have touched countless people all over the world.
'It's a treasured legacy we will proudly continue in this next chapter of our celebrated history.
'By operating as two distinct and optimised 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.'
The split will create a new streaming and studios arm housing the Warner Bros film and TV production groups – DC Studios, HBO and HBO Max – and the group's studio spaces in Leavesden and California.
The other division, called Global Networks, will encompass WBD's traditional TV brands around the world.
Mr Zaslav will lead the streaming and studios division, while Gunnar Wiedenfels, the current chief financial officer, will head Global Networks. Both executives will remain in their present roles until the separation, which is expected to be completed by the middle of next year.
The move is not expected to have a major impact on the UK, where WBD is preparing to launch its HBO Max streaming service early next year. Subscribers will be able to watch high-end US dramas such as House of the Dragon, White Lotus and Succession.
The launch marks a setback to Sky, which previously held exclusive rights to show HBO programming in the UK. While HBO Max will be bundled into Sky at no extra cost, meaning viewers will still have access to these shows, the deal will no longer be exclusive.
In a further challenge to Sky, HBO Max will also be home to sports programming from TNT Sports. WBD is currently in discussions to take full ownership of TNT by buying BT's 50pc stake in the joint venture.
WBD said the majority of its debt will be spun off into the networks division. The company plans to restructure its debt using a $17.5bn loan from JP Morgan, which will be refinanced prior to the separation.
The Global Networks division will also take a 20pc stake in the streaming and studios business, which it will gradually sell off to help pay down debt. Shares in WBD rose 7pc following the announcement.
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