Warner Bros Discovery (WBD) announced a restructuring that will see the media conglomerate split into two publicly traded companies, separating its streaming and studio operations from its traditional cable networks. The decision underscores the mounting pressure legacy media firms face in adapting to the streaming era and sustaining investor confidence.
Under the plan, the company’s crown jewels—Warner Bros, DC Studios, and the HBO Max streaming platform—will be housed in one entity, while the second will contain WBD’s declining cable assets, including CNN, TNT Sports, and Bleacher Report. CEO David Zaslav will lead the newly-formed streaming and studios company, while current CFO Gunnar Wiedenfels will oversee the networks division.
“This separation gives each business the strategic focus and operational flexibility needed to compete and grow in their respective markets,” Zaslav told investors. The transaction, expected to be tax-free, will be finalized by mid-2026.
The restructuring marks a reversal of the 2022 WarnerMedia–Discovery merger and represents a broader unwinding of legacy media consolidation. In a challenging environment where cord-cutting continues to erode cable revenues and streaming services battle for market share, the split is aimed at unlocking value by shedding underperforming assets.
Financial Engineering Meets Market Skepticism
WBD’s share price dropped nearly 3% following the announcement, erasing early gains and reflecting investor caution. The stock has fallen almost 60% since the 2022 merger, hampered by cable subscriber losses, intense streaming competition, and concerns over the company’s high debt load, which stood at $38 billion as of March.
Most of that debt will be retained by the cable networks business, which will also hold up to a 20% stake in the streaming-and-studios spin-off. To facilitate the transition, WBD secured a $17.5 billion bridge loan from J.P. Morgan to restructure its liabilities.
However, the financial maneuvering has sparked tension with creditors. According to the Wall Street Journal, bondholders—advised by law firm Akin Gump Strauss Hauer & Feld—are organizing to oppose elements of the restructuring, particularly clauses that would restrict investor cooperation. WBD has not confirmed these reports.
Some analysts remain skeptical of the move’s effectiveness. “The split doesn’t fix WBD’s fundamental problems,” said Brian Wieser, CEO of Madison and Wall. “It risks prioritizing financial engineering over actual operational improvement and could constrain both businesses until the transaction is complete.”
Strategic Positioning and Sector Implications
This latest breakup mirrors other recent moves across the media landscape. Comcast is spinning off much of its NBCUniversal cable portfolio into a new unit, Versant, while Lionsgate finalized the separation of its Starz network from its production arm in May.
With HBO Max gaining renewed emphasis as a premium content platform—featuring series like The Last of Us and Hacks—WBD hopes to boost its global subscriber base from 122 million to over 150 million by 2026. Still, this remains well behind Netflix’s 300 million and Disney’s combined 181 million subscribers across Disney+ and Hulu.
The split is also expected to catalyze further consolidation across the sector. Analysts suggest WBD’s cable networks could become part of Comcast’s new cable entity, while its streaming and studio arm may seek synergies with other players, such as Comcast’s Peacock.
Any potential mergers would face close scrutiny from U.S. antitrust regulators, particularly given growing concerns over market concentration and consumer pricing. “The regulatory environment is cautious, but strategic combinations remain possible,” said Jeff Wlodarczak of Pivotal Research.
Executive Pay and Shareholder Sentiment
WBD’s leadership faces not only operational challenges but also shareholder dissatisfaction. At the recent annual meeting, nearly 59% of shareholders rejected the company’s executive compensation packages, including Zaslav’s $51.9 million for 2024.
The broader trend reflects growing investor frustration with traditional media companies struggling to pivot effectively to digital models. “WBD has become a patchwork of underperforming businesses,” said Dan Coatsworth, an analyst at AJ Bell. “This separation may finally allow each side to focus and attract more targeted investor interest.”
Looking Ahead
WBD is being advised by J.P. Morgan and Evercore, with Kirkland & Ellis acting as legal counsel. As the company repositions itself for a new era, the split will be closely watched as both a test case and potential precursor to broader realignment in the entertainment industry.
For now, Zaslav and his team are betting that structural simplification—however complex in execution—will offer the clearest path toward long-term value creation.
