Warner Bros.’ Discovery will split into two public companies by next year. The company will separate the streaming service and cable operations. The split is expected to be completed by the middle of next year, with Warner…
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Warner Bros. Discovery will split into two public companies by next year. The company will separate cable operations from its streaming service. Warner Bros. Discovery said on Monday that Streaming and Studios will include Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO and HBO Max, as well as their film and television libraries.
The Global Networks company will include CNN, TNT Sports in the US, and Discovery, top free-to-air channels across Europe, and digital products such as the Discovery+ streaming service and Bleacher Report. David Zaslav, CEO of Warner Bros. Discovery, will serve as CEO of Streaming and Studios. Gunnar Wiedenfels, Chief Financial Officer of Warner Bros. Discovery, will serve as CEO of Global Networks. Both will continue to serve in their current roles until the separation. The split is expected to be completed by mid-next year.
Warner Bros. Discovery has announced that it will split itself into two companies – ‘Streaming and Studios’ and ‘Global Networks’ – to better adapt to the era of streaming services.
In a press release issued on June 9, CEO David Zaslav of the parent company of HBO, CNN and Max will lead the ‘Streaming and Studios’ division and CFO Gunnar Wiedenfels will lead the other division, said a press release.
“By operating as two separate and optimized companies in the future, we are empowering these iconic brands with the clearer focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav explained.
The split is expected to help the company focus and build on these two areas amid a gradual shift in viewership from the once lucrative cable TV to streaming services.
With regard to the slow decline of cable TV, Wiedenfels explained, “At Global Networks, we will focus on identifying innovative ways to work with distribution partners to create value for both linear and streaming audiences globally, while also optimizing the use of our network assets and increasing free cash flow.”
This diversification is also expected to help each company attract its own unique shareholder base.
The company had already hinted at a separation last December, laying the groundwork for a potential sale or spinoff of its declining cable TV assets, which are now consolidated under ‘Global Networks’. This has further raised the possibility of an alliance with Comcast, which is similarly spinning off most of its cable TV networks such as MSNBC and CNBC.
The press release also stated that Warner Bros. debt portfolio will be funded by a $17.5 billion committed bridge facility provided by JPMorgan. The bridge facility is expected to be refinanced ahead of the separation – which is scheduled to be completed by mid-2026 – also aided by Global Networks’ 20% stake in streaming and the studio.
The separation is now subject to closing and other conditions, including final approval by the Warner Bros. Discovery board, receipt of a tax opinion and/or a private letter decision from the Internal Revenue Service.
JPMorgan and Evercore are acting as financial advisors to Warner Bros. Discovery and Kirkland & Ellis LLP are acting as legal advisors.
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