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Warner Bros Discovery to Split Streaming and Studios from Cable Networks in Major Corporate Restructuring

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Warner Bros Discovery (WBD) announced plans to divide into two separate publicly traded companies, separating its streaming and studio businesses from its declining cable television networks. This move aims to allow the streaming and studios unit—housing assets like Warner Bros, DC Studios, and HBO Max—to focus on growth without being weighed down by the struggling cable networks division that includes CNN, TNT Sports, and Bleacher Report.

The separation will be executed as a tax-free transaction expected to complete by mid-2026. CEO David Zaslav will lead the new streaming and studios company, while CFO Gunnar Wiedenfels will head the networks business, which will retain up to a 20% stake in the streaming entity. The majority of WBD’s substantial $38 billion debt will remain with the cable networks company. To facilitate this, WBD secured a $17.5 billion bridge loan from J.P. Morgan.

The restructuring comes amid ongoing challenges for WBD, including heavy debt, subscriber losses in cable TV, and intense competition in streaming. Shares initially surged after the announcement but later retreated, reflecting investor concerns. Shareholder dissatisfaction was highlighted at the company’s recent annual meeting, where about 59% voted against executive pay packages.

Industry experts warn the split may not resolve WBD’s core issues and could complicate operations during the transition. Nonetheless, the move aligns with broader media trends, as companies like Comcast and Lionsgate also separate cable networks from content studios to sharpen focus and unlock shareholder value.

WBD’s streaming service, recently rebranded as HBO Max, currently has about 122 million subscribers and aims to exceed 150 million by 2026. Despite this, it remains behind competitors like Netflix and Disney+ in scale. Analysts predict continued consolidation in the cable networks space, with Comcast’s forthcoming spinoff of NBCUniversal cable networks and speculation that WBD’s networks could become acquisition targets.

The split underscores the shifting landscape of media consumption, where streaming growth contrasts with declining traditional TV viewership, forcing legacy companies to reorganize to stay competitive.

Warner Bros Discovery Eyes Potential Breakup Amid Revenue Miss and Cable Decline

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Warner Bros Discovery (WBD) is reportedly moving toward a potential company breakup, according to CNBC, as it looks to shed its struggling cable TV division and concentrate on faster-growing streaming and studio segments. The news sent WBD shares climbing over 4%, partially offsetting a sharp 6% drop earlier in the day following disappointing Q1 earnings.

The strategic shift comes as the broader media industry undergoes a profound transformation. Cord-cutting continues to erode the profitability of traditional cable networks, pushing media giants like WBD to reevaluate their core assets. WBD, which was formed through the 2022 merger of Warner Media and Discovery, had already taken initial steps in December by operationally separating its cable TV division from its studio and streaming units.

KEY FINANCIAL HIGHLIGHTS:

  • Revenue: Fell 10% YoY to $8.98 billion, missing analyst expectations of $9.60 billion.

  • Earnings: Posted a wider-than-expected loss of $0.18 per share versus the forecasted $0.13 loss.

  • Studio revenue: Dropped 18% to $2.31 billion, missing the $2.73 billion consensus.

  • Cable networks revenue: Declined 7%.

  • Streaming performance: A bright spot, with Max adding 5.3 million subscribers, beating estimates and bringing its total base to 122.3 million.

CEO David Zaslav highlighted Max’s continued appeal in the competitive streaming space, driven by strong programming like The White Lotus and The Pitt. Still, the studio division underperformed due to weak box office results — most notably the underwhelming performance of Mickey 17, which failed to replicate the success of Dune: Part Two.

On a more optimistic note, Q2 appears to be off to a better start. WBD’s latest theatrical releases — Ryan Coogler’s Sinners and A Minecraft Movie — have garnered major success, with the latter earning nearly $900 million globally and becoming 2025’s biggest box office hit to date.

A potential split would align WBD with peers like Comcast, which is also spinning off traditional cable properties in favor of a more streamlined digital content model. However, analysts caution that divesting cable assets could be challenging due to WBD’s heavy debt burden of $38 billion and the declining appeal of linear TV.

“WBD would be leaner and have stronger growth potential without cable assets,” noted eMarketer’s Ross Benes. “But finding a buyer could be difficult.”

While Warner Bros Discovery has yet to comment on the breakup report, the path toward separation could reshape its future trajectory as it competes for relevance and revenue in an increasingly digital-first entertainment industry.

Spotify Pays Record $10 Billion in Royalties in 2024

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Spotify announced on Wednesday that it paid a record $10 billion in royalties to the music industry in 2024, marking the largest annual payout in its history. The Swedish streaming giant reported that nearly 1,500 artists earned over $1 million each in royalties last year, underscoring the platform’s significant financial contribution to the music world.

Spotify also highlighted that its annual payouts have increased substantially over the years, rising by 10 times from $1 billion in 2014. Despite this impressive growth, the company faced a legal challenge last year when it was sued in the U.S. for allegedly underpaying songwriting royalties for millions of songs. However, a federal judge in New York ruled to dismiss the lawsuit earlier this year, clearing the company of the claims.