Warner Bros. Discovery separates TV networks from its streaming and studio business

• Warner Bros. Discovery is splitting its linear TV business from streaming and studios.
• Comcast last month also spun off its cable networks — except Bravo — into a stand-alone company.
• The moves illustrate a cable business in decline, with both repositioning for M&A opportunities.

Warner Bros. Discovery is separating its linear television business from its streaming business and film studios.

It follows a similar move by Comcast, which announced in November it would spin off all of its NBCUniversal cable networks except Bravo into a stand-alone company.

The new corporate structure will be complete by the middle of next year, WBD said. Unlike Comcast, WBD won't spin its assets off into a separate company.

A new Global Linear Networks division will house TV properties like the Discovery Channel and CNN, while the Streaming & Studios side will be the home of Max and movie studio Warner Bros. Motion Picture Group.

"Our Global Linear Networks business is well positioned to continue to drive free cash flow, while our Streaming & Studios business focuses on driving growth," WBD president and CEO David Zaslav said in a statement.

A source with direct knowledge of the matter said the move was meant to clean up the company's structure, which was formed in 2022 from the combination of WarnerMedia and Discovery. (Discovery itself was the product of its acquisition of Scripps Networks in 2017.)

This person said the company is still determining how the specific business units will be divided, and no leadership changes were planned.

The moves by both Comcast and WBD illuminate a cable business increasingly in decline. Their repositioning of properties could help them participate in potential mergers and acquisitions expected to reshape the media and entertainment industry in 2025.

Warner Bros. Discovery was supposed to create scale and value and help compete with Big Tech by mashing WarnerMedia's prestige networks like HBO and CNN with Discovery's lifestyle properties like HGTV. But its stock has sunk to about a third of its value at the time of its creation in 2022. (It was up about 14% Thursday morning on the news of the new organization.)

Industry observers say a Comcast-like spin wouldn't be favorable for WBD because it needs the cash from its linear channels to pay down the heavy debt it took on to form the company.

Still, they see WBD bulking up or shedding channels, with Paramount Global or Comcast seen as the most likely merger partners.

The announcement was met with mixed reactions from analysts. BofA Securities, which has long argued that WBD should sell assets or merge with another company, said in a note that it saw WBD's linear assets as a logical partner for the Comcast SpinCo, while its streaming and studio assets could be an attractive takeover target for multiple suitors.

Longtime ad industry advisor Brian Wieser said that as with the Comcast SpinCo, a WBD separation weakens the company on a few fronts, though. Without being tethered to the cable channels, he said, it'll be harder for WBD's streamer Max to grow its ads business, which is becoming increasingly important. The linear networks will lose leverage in distribution negotiations without Max and have trouble attracting talent if they're seen as a declining business, among other issues, he said.

In July, WBD reportedly floated the idea to investors of essentially undoing the 2022 merger to create the two separate divisions. And in August, the company said its TV assets were worth $9 billion less than it had anticipated just two years ago.