Warner Bros Discovery To Split Into Two Public Companies By 2026

The move marks a dramatic reversal of the company’s 2022 merger between WarnerMedia and Discovery, reflecting the growing pressure to prioritise streaming growth

Critics remain skeptical of the move’s long-term impact

Source : Pexels

Warner Bros Discovery has announced a significant restructuring move, confirming plans to split into two separate publicly traded companies. The reorganisation will create one entity dedicated to its studios and streaming platforms, and another overseeing its traditional cable television networks, a bold effort to adapt to the evolving digital media landscape, according to a Reuters report.

The move marks a dramatic reversal of the company’s 2022 merger between WarnerMedia and Discovery, reflecting the growing pressure to prioritise streaming growth while shedding the declining influence of legacy TV networks. The entertainment division, set to house major assets like Warner Bros., DC Studios, and HBO Max, will stand apart from the networks unit, which includes CNN, TNT Sports, and Bleacher Report, it added.

As part of the transaction, which is structured to be tax-free and is anticipated to finalise by mid-2026, the networks company will retain up to a 20 per cent stake in the new streaming-and-studios firm. CEO David Zaslav is slated to lead the latter, while CFO Gunnar Wiedenfels will head the networks' operation.

“We’ve continued to analyze how our industry is evolving,” Zaslav stated during an investor call, as per the Reuters report. “The right path forward became increasingly clear ... to separate global networks and streaming and studios into two independent, publicly traded companies.”

WBD’s financial strategy includes a $17.5 billion bridge loan from J.P. Morgan to help restructure its $38 billion debt load. The majority of that debt will be assigned to the networks division. However, this restructuring plan has drawn scrutiny from creditors, who are reportedly consulting with legal advisers to push back against WBD’s restrictions on investor cooperation agreements, as reported by The Wall Street Journal.

Investors Sentiments

The announcement initially boosted investor sentiment, sending shares up before they dipped nearly 3 per cent by midday. Since the original merger, WBD stock has fallen around 60 per cent, weighed down by declining cable subscriptions and fierce competition in the streaming sector.

Critics remain skeptical of the move’s long-term impact. Brian Wieser, CEO of advisory firm Madison and Wall, suggested the strategy may emphasise financial maneuvering over operational improvement. “If anything, (it) could make them worse off,” he warned, states the report.

The split aligns with broader industry trends. Comcast is separating its NBCUniversal cable networks into a new entity, Versant, and Lionsgate recently finalised the spinoff of Starz from its studios. Analysts anticipate more such deals as legacy networks continue to struggle.

For WBD, the rebranding of HBO Max and renewed focus on prestige content, including hits like The Last of Us and Hacks, underscore its ambitions in streaming. The company reported 122 million subscribers as of March, aiming to surpass 150 million by late 2026, still trailing Netflix and Disney+.