Warner Bros. Discovery Split Has 'Been the Right Move for Years': Analysts
Warner Bros. Discovery -- formed from Discovery's 2022 purchase of WarnerMedia -- will again become two companies, one focused on cable networks and the other on streaming. WBD announced the restructuring Monday, saying it should be done by mid-2026. The split comes after Comcast separated its cable networks and digital assets (see 2411200001) and Lionsgate separated its movie studio and TV businesses (see 2405140002). Analysts and others said WBD's move to two independent, publicly traded companies should have happened awhile ago.
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Streaming and cable are often competing for the same ad dollars and will soon start to compete more heavily for the same distribution deals, TVRev's Alan Wolk wrote Monday. Separating them means that companies like Comcast and WBD won't have to worry about competition within their internal divisions, he said, adding that the linear networks business also won't be a drag on the streaming businesses.
"Getting out of linear cable networks sounds like a great idea, but it honestly feels like legacy media executives all waited far too long to hit the eject button," Lightshed Management wrote last week. Lightshed said it's "increasingly unclear if any form of financial engineering can create shareholder value at this point."
Former WarnerMedia Chief Revenue Officer Tony Goncalves wrote that the streaming/cable split is "the right move. I just wish it had happened before so much value was lost. It’s been the right move for five years."
Under the restructuring, WBD will divide into a streaming and studios company, with assets including HBO, DC Studios, Warner Bros. TV and Warner Bros. Motion Picture Group, and a global networks company, with assets including CNN, TNT Sports in the U.S., Discovery and Discovery+. WBD CEO David Zaslav will continue CEO for the streaming and studios spinoff, while WBD CFO Gunnar Wiedenfels will become CEO of the global networks business.
WBD said the deal still needs final approval from the WBD board. The company made no mention of any regulatory approvals that might be needed.
In a call with analysts Monday, Zaslav said WarnerMedia and Discovery in 2022 "were uniquely well suited to come together, to not only navigate but transform within an industry going through generational disruption." With WBD having made HBO a global brand, paid down debt and restructured its games division, the focus now is on greater shareholder value, he said. Separately, the two will be "more agile, more aggressive and creative in pursuing growth."
Wolk said both sides in the WBD deal will end up with "some stellar proprieties" -- HBO on one side, CNN and especially Discovery and HGTV, with their inexpensive shows, on the other.