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Warner Bros. Discovery has announced plans to split its television networks and streaming and studio businesses into two divisions, in a move that increases the likelihood that the owners of HBO and CNN will break up.
The group’s restructuring plan announced on Thursday sent its stock price up as much as 16%, its highest level since the end of 2023, according to FactSet data. It remains down about 50% since the group was formed in 2022 through the merger of Warner Media and Discovery.
Warner Bros. said its TV business is “focused on maximizing profitability and free cash flow,” while its streaming and studio divisions are “focused on driving growth and delivering strong returns from increased invested capital.” He said he was building a “structure”. .
Warner Bros.’ reorganization follows a more dramatic step last month when rival Comcast announced it would spin off its television networks, including CNBC and MSNBC, into separate companies.
These moves by America’s largest television network owner highlight the growing strain on traditional “linear” television, once the bedrock of the entertainment business. Media groups are trying to free their fast-growing streaming businesses from these declining channels and revitalize flagging stock prices.
Bank of America analysts said Thursday: “This new structure will give the company more flexibility for future strategic actions, including strategic rotations of its studio and streaming assets.” said. “We believe Warner Bros.’ standalone streaming and studio assets make it an attractive acquisition target for multiple suitors.”
Warner Bros.’ reorganization comes after the Financial Times reported in July that the group was considering a range of options to boost its stock price, including spinning off its streaming services and studio. . The restructuring is expected to be completed by mid-2025. Warner Bros. also plans to revamp its board of directors to improve value.
Warner Bros. CEO David Zaslav said the company’s reorganization will “enhance our flexibility by unlocking potential future strategic opportunities across the evolving media landscape.” ” he said. The group has been pursuing smaller asset sales for months to reduce its debt burden of more than $40 billion.
Entertainment companies have been grappling with the future of their cable networks for years. This year, Warner Bros. wrote down the value of its legacy cable network by $9.1 billion.
