Warner Brothers Discovery Sparks Spin Off Chatter

Warner Bros. Discovery (WBD) is reportedly considering a significant restructuring that could lead to a breakup of its business operations, as announced on Thursday. 

The move aims to separate its declining cable TV networks from its faster-growing streaming and studio divisions, reflecting broader industry trends as media companies grapple with cord-cutting and shifting consumer preferences toward streaming.

Restructuring Plan:  WBD is exploring a split into two entities:

• Global Linear Networks: This would include cable networks like CNN, Discovery Channel, and Animal Planet, which have seen a 7% revenue decline due to ongoing cord-cutting trends.
• Streaming and Studios: This unit would encompass the Max streaming platform and WBD’s film and TV studios, which are seen as higher-growth areas despite recent studio revenue drops.

The cable TV sector is struggling, with linear TV revenues down and a deteriorating market for traditional networks. Meanwhile, WBD’s streaming unit, including Max and Discovery+, added 5.3 million subscribers in Q1 2025, reaching over 122 million globally, signaling stronger growth potential. The split aims to create a leaner, more focused company with enhanced growth prospects by isolating the struggling cable assets.

WBD reported mixed Q1 2025 results, with a per-share loss of 18 cents, worse than analyst expectations, and an 18% drop in studio revenues due to a weak box office slate. However, streaming subscriber growth and a $259 million studio EBITDA provided some positive notes. 

Revenue at the TV networks segment, which includes CNN, Discovery Channel and Animal Planet, fell 7%.

The company carries significant debt from its 2022 merger, which complicates finding buyers for the cable unit.

Market Reaction: WBD shares surged over 4-6% on May 8, 2025, after the breakup news, rebounding from losses tied to the weak quarterly report. Despite this, the stock is down roughly 15% year-to-date.

David Zaslav

CEO David Zaslav emphasized the reorganization into two divisions (Linear Networks and Studio & Streaming) allows WBD to move quickly if a split is pursued. The company began laying groundwork for this in December 2024, separating operations to improve focus and potentially position units for future sales or mergers.

Analysts note that while a breakup could unlock value, selling the cable networks may be difficult due to their declining value and WBD’s high debt levels (3.8 times leverage). The company’s streaming and studio arm, bolstered by iconic brands like HBO and DC, is seen as more attractive to investors or potential buyers.

The potential breakup aligns with broader media industry shifts, as companies like Paramount Global also face pressure to divest or restructure amid declining cable TV relevance. Speculation about WBD’s future has been ongoing since its 2022 merger, with earlier posts on X in July 2024 indicating similar discussions.

Some analysts and investors view the split as a way to address the “incessant decline in linear cable” and refocus on streaming and content creation.