Warner Bros Discovery on Thursday decided to separate its declining cable TV businesses such as CNN from streaming and studio operations such as Max, laying the groundwork for a potential sale or spinoff of its TV business as more cable subscribers cut the cord, according to Reuters.
Shares of Warner jumped after the company said the new structure would be more deal friendly and it expected to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.
Media companies are considering options for fading cable TV businesses, a longtime cash cow where revenues are eroding as millions of consumers embrace streaming video.
Comcast plans to split most of its NBCUniversal cable networks into a new public company. The new company would be well capitalized and positioned to acquire other cable networks if the industry consolidates, one source told Reuters.
"We strongly believe there is potential for fairly sizable synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, using the industry term for traditional television.
"Further, we believe WBD's standalone streaming and studio assets would be an attractive takeover target."
Under the new structure for Warner Bros Discovery, the cable TV business including TNT, Animal Planet and CNN will be housed in a unit called Global Linear Networks.
Streaming platforms Max and Discovery+ will be under a separate division along with film studios, including Warner Bros Pictures and New Line Cinema.
The restructuring reflects an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are finally paying off.
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