HBO parent Warner Bros to split TV and streaming into two units

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Warner Bros Discovery unveiled plans to split its television networks and streaming and studios businesses into two units, in a move that heightens the odds of a break-up of the owner of HBO and CNN.

The group’s restructuring plans, announced on Thursday, sent shares rallying as much as 16 per cent to the highest level since late 2023, according to FactSet data. They are still down some 50 per cent since the group was formed in 2022 by the merger of Warner Media and Discovery.

Warner Bros said it was creating a “new corporate structure”, in which the television business “will focus on maximising profitability and free cash flow”, while the streaming and studios division “will focus on driving growth and strong returns on increasing invested capital”. 

Warner Bros’s reorganisation follows a more dramatic step taken by rival Comcast, which last month said it would spin off its television networks including CNBC and MSNBC into a separate company.

These moves taken by America’s largest television network owners underscore the growing strains for traditional “linear” television, once the bedrock of the entertainment business. Media groups are seeking to unshackle their faster-growing streaming businesses from these declining channels to jump-start their sagging stock prices. 

“This new structure should give the company more flexibility for future strategic actions, such as a strategic spin of their studio and streaming assets,” analysts at Bank of America said on Thursday. “We believe Warner Bros standalone streaming and studio assets would be an attractive takeover target for multiple suitors.”

Warner Bros’s restructuring comes after the Financial Times reported in July that the group had discussed a range of options to boost its share price, including spinning off its streaming service and studio. The restructuring is expected to be completed by mid-2025. Warner Bros will also shake up its board to help drive value.

David Zaslav, Warner Bros chief executive, said the company’s reorganisation “enhances our flexibility with potential future strategic opportunities across an evolving media landscape”. The group has for months pursued smaller asset sales to help cut its more than $40bn debt load.

Entertainment companies have long grappled with the future of their cable networks — this year Warner Bros wrote down the value of its traditional cable networks by $9.1bn.