NEW YORK—In a move that signals further dealmaking and consolidation in the media and entertainment industry, Warner Bros. Discovery has announced a new corporate structure that will split the company into two divisions.
One unit will consist of its global linear networks, which include Discovery, TNT and others; the second division will include its streaming and studio operations, which include Max, its Hollywood studios and other operations.
The company did not specify where HBO would fall in this mix but it is believed that it will be included in the streaming/studio division given its importance to the Max streaming service.
The move follows a decision by Comcast to spin off its linear cable networks amid rampant cord cutting and is part of what analysts believe will be another period of consolidation in the media and entertainment industry.
In announcing the new corporate structure, Warner Bros Discovery said that it will enhance “its strategic flexibility and create potential opportunities to unlock additional shareholder value." The company’s stock price, which has been hurt by the ongoing decline of the pay TV business, soared on the news that the company will be better positioned for dealmaking.
“Since the combination that created Warner Bros. Discovery, we have transformed our business and improved our financial position while providing world class entertainment to global audiences,” said Warner Bros. Discovery president and CEO, David Zaslav. “We continue to prioritize ensuring our Global Linear Networks business is well positioned to continue to drive free cash flow, while our Streaming & Studios business focuses on driving growth by telling the world’s most compelling stories. Our new corporate structure better aligns our organization and enhances our flexibility with potential future strategic opportunities across an evolving media landscape, help us build on our momentum and create opportunities as we evaluate all avenues to deliver significant shareholder value.”
Warner Bros. Discovery expects to start working on the reorganization immediately and plans to complete the implementation of the new corporate structure by mid-2025.
The company described the two divisions as follows:
- Global Linear Networks: A premier linear television business that operates some of the most renowned networks with compelling news, sports, scripted and unscripted programming.
- Streaming & Studios: A globally scaled streaming platform and storied film and entertainment studios with a portfolio of the world’s most beloved intellectual property.
The company reported that Global Linear Networks will focus on maximizing profitability and free cash flow to continue deleveraging, its heavy debt load.
In contrast, Streaming & Studios will focus on driving growth and strong returns on increasing invested capital.
J.P. Morgan, Evercore, and Guggenheim Securities are serving as financial advisors to Warner Bros. Discovery and Kirkland & Ellis and Wachtell Lipton are serving as legal counsel.
