Warner Bros. Discovery (WBD) announced a significant corporate restructuring on June 9, 2025, revealing plans to split into two separate publicly traded companies by mid-2026. This strategic move aims to enhance operational efficiency and focus, separating its streaming and studio operations from its global networks. The decision is a response to shareholder concerns and reflects broader trends in corporate governance and accountability.
Background and Rationale
The restructuring comes after years of financial challenges following the 2022 merger of WarnerMedia and Discovery. Since the merger, WBD has faced declining revenues, mounting debt, and increasing competition in the media industry. In 2024, the company reported an $11.5 billion loss, and its stock has declined by approximately 60% since the merger. Shareholder dissatisfaction has been evident, with a recent rejection of CEO David Zaslav’s $52 million pay package. The split is seen as a necessary step to streamline operations and unlock shareholder value.
The Two New Entities
The first entity, “Streaming & Studios,” will encompass WBD’s entertainment-heavy divisions, including Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max. David Zaslav will lead this division as President and CEO. This unit will focus on scaling HBO Max globally and investing in world-class programming.
The second entity, “Global Networks,” will house the firm’s television and sports businesses, such as CNN, TNT Sports, Discovery, Bleacher Report, and various European free-to-air networks. CFO Gunnar Wiedenfels will head this division. The networks division will assume most of the company’s $37 billion debt and retain a 20% stake in the streaming business. This structure aims to provide each company with greater strategic flexibility and focus.
Financial Implications and Market Reaction
Following the announcement, WBD’s stock surged nearly 13% before slightly retreating. Analysts from Bank of America upheld a “Buy” rating on WBD stock, citing the company’s strong asset portfolio. The decision to split is expected to enhance shareholder value by allowing investors to value the streaming and studio assets separately from the declining cable networks. This move aligns with broader industry trends, as other media companies, such as Comcast and Disney, are also restructuring or selling assets to adapt to changing market dynamics.
Strategic Goals and Future Outlook
The restructuring aims to unlock value and focus by creating two distinct and optimized companies. The Streaming & Studios division will be able to make riskier content investments with a focus on growth and maximizing return on investment. The Global Networks division will focus on maximizing profitability and free cash flow to continue deleveraging. The separation provides clarity of focus and unlocks value, enabling each division to adapt independently to the evolving media landscape.
For investors, the potential to spin off pieces or all of its divisions can enhance shareholder value since the company has a mountain of well-known brands and intellectual properties. The restructuring sets clear lines of responsibilities, goals, and accountability, facilitating more effective and faster decision-making with less red tape.
Industry Context
The move by WBD is part of a broader trend in the media industry, where companies are separating their streaming and cable operations to better align with changing consumer preferences. Comcast, for instance, has announced plans to spin off its traditional cable outlets into a separate company. Similarly, Disney is restructuring by merging its TV studios and cutting jobs to streamline operations. These industry shifts reflect the growing importance of streaming services and the need for companies to adapt to the digital age.
Conclusion
Warner Bros. Discovery’s strategic split into two separate companies marks a significant shift in the media landscape. By separating its streaming and studio operations from its global networks, WBD aims to enhance operational efficiency, focus, and shareholder value. The move reflects broader trends in the industry and positions WBD to better compete in an evolving media environment.
