Warner Bros Discovery to split into two

Streaming, cable TV to separate by 2026

- BENJAMIN MULLIN LAUREN HIRSCH

Another high-profile divorce just shook Hollywood.

Warner Bros Discovery, the film and TV colossus behind HBO and CNN, announced Monday that it would cleave itself into two companies, becoming the latest entertainment conglomerate to unshackle its withering cable networks from its growing streaming services.

David Zaslav, CEO of Warner Bros Discovery, will lead the company’s streaming and studios business, which will include streaming service HBO Max and Warner Bros Motion Picture Group. The cable business, which will include CNN, will be run by Gunnar Wiedenfels, chief financial officer of Warner Bros Discovery.

“By operating as two distinct and optimised companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Mr Zaslav said in a statement.

Warner Bros Discovery said it expected the transaction to be completed by the middle of next year. Shares of the company initially jumped on news of the separation but closed down nearly 3%.

The decision to split is a major about-face from the conventional wisdom in the industry when Warner Bros Discovery was created three years ago — that media companies needed to get bigger to compete with streaming giants like Netflix. Following that logic, Disney acquired 21st Century Fox, AT&T bought Time Warner, and Discovery merged with WarnerMedia.

US media giants have been looking to jettison their declining cable networks while preserving their faster-growing streaming services. Comcast, the parent company of NBC and Universal Studios, said last year it would separate its traditional TV business into a new company called Versant.