Warner Bros Discovery Splits Into Two Companies: In a significant corporate restructuring, Warner Bros Discovery has officially announced its plan to split into two separate publicly traded entities—one focused on its fast-growing streaming and studio operations, and the other centered around its legacy global networks business. This long-anticipated move is poised to redefine the company’s strategic direction and financial foundation.
Warner Bros Discovery Splits Into Two Companies
In a significant corporate restructuring, Warner Bros Discovery has officially announced its plan to split into two separate publicly traded entities—one focused on its fast-growing streaming and studio operations, and the other centered around its legacy global networks business. This long-anticipated move is poised to redefine the company’s strategic direction and financial foundation.
The Split: Streaming & Studio vs. Global Networks
The split will separate Warner Bros Discovery’s HBO Max streaming service and Warner Bros Studios into one company, while bundling its extensive cable network holdings under another. The latter includes Turner networks like TNT and TBS, Bleacher Report, and international channels with significant presence in markets like Poland.
Interestingly, while this marks a strategic separation of growth and cash flow-driven businesses, the global networks unit will retain up to a 20% stake in the streaming/studio entity. This stake can be sold within the first year post-closing, allowing the networks unit to deleverage further—a critical priority for the highly indebted company.
Debt Strategy and Financing Structure
As of the latest quarter, Warner Bros Discovery carried a debt burden of approximately $34 billion with a leverage ratio of 3.8x. The restructuring will see most of this debt transferred to the cash flow-rich global networks unit, allowing the streaming/studio entity to start its journey as a cleaner, growth-oriented vehicle.
To support a large bond tender offer and proactively reduce outstanding debt, Warner Bros Discovery has secured a $17.5 billion bridge loan from JPMorgan. The proceeds will be used to repurchase bonds at a discount (though still at a premium to current trading prices), thereby easing interest payments and reducing bondholder influence over strategic maneuvers.
Eventually, this bridge loan will be replaced by secured debt, senior to any remaining bondholders, further strengthening the company’s financial posture.
Leadership and Structure Post-Split
David Zaslav will lead the streaming and studios unit—a business that includes high-profile assets such as HBO, Warner Bros Television, and the Max platform. The global networks division will be helmed by the current CFO, who transitions to CEO of the networks entity.
Streaming has been a growing business for Warner Bros Discovery. Last quarter, HBO Max and the studio delivered around $340 million in EBITDA, with projections to grow to $1.3–1.5 billion by year-end. Future targets could be as high as $3 billion in annual EBITDA.
Timeline and Regulatory Approval
The company expects the split to be finalized in the second half of 2026. Since there are no broadcast networks involved, the restructuring is unlikely to face major regulatory hurdles, particularly from the FCC. However, any future M&A activity—especially in the streaming space—may draw closer scrutiny from antitrust regulators.
A Strategic Bet on Streaming Consolidation
There is speculation that the streaming division, post-split, could emerge as a consolidator in a fragmented market. With platforms like Peacock and Paramount potentially looking for tie-ups, Warner Bros Discovery may find itself in a strong position to lead or participate in industry consolidation.
Still, the company has not ruled out the possibility of being acquired, especially by tech giants like Apple or Amazon. While no such talks are confirmed, the company’s new structure would make it more attractive and digestible for potential buyers.
Sports Assets and Content Rights
Though Warner Bros Discovery lost the NBA broadcasting rights recently, it retains other major sports contracts, including NASCAR, NHL, MLB, NCAA tournaments, and college football. These rights will stay under the Global Networks umbrella, further ensuring stable revenue streams.
Market Reaction
Following the announcement, Warner Bros Discovery stock surged by approximately 11% at market open, reflecting investor optimism about the restructuring. The stock opened trading at around $10.84 per share. Despite this bounce, the shares remain significantly down—trading over 88% below their all-time high of $80, highlighting the long road ahead for the company to regain investor confidence.
The split marks a defining moment for Warner Bros Discovery. The company is betting big on a leaner, more growth-focused future in streaming and content creation, while simultaneously working to unlock value and reduce risk from its traditional networks. With strategic debt reduction, clean business segmentation, and a vision for consolidation, Warner Bros Discovery may be setting the stage for a more competitive and financially agile future.
Disclaimer:
This article is for informational purposes only and does not constitute financial or investment advice. Please consult with a professional advisor before making investment decisions.