Warner Bros. Discovery (WBD) stock popped early Monday after the company announced plans to split into two independent, publicly traded companies, separating its streaming and studio assets from its global television networks business.
The company said the transaction, expected to close by mid-2026, is designed to unlock shareholder value by giving each business a sharper strategic focus, allowing them to be “faster and more aggressive” in pursuing opportunities.
Shares rose as much as 12% shortly after the opening bell before paring gains to around 7% in late morning trade.
David Zaslav, currently president and CEO of Warner Bros. Discovery, will lead the newly formed streaming and studios unit. Gunnar Wiedenfels, the company’s CFO, will become president and CEO of global networks. Both executives will remain in their existing roles until the separation is finalized.
“By operating as two distinct and optimized 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,” Zaslav said in a statement.
The streaming and studios company will include HBO and HBO Max, along with Warner Bros. Television and Motion Picture Group, DC Studios, Warner Bros. Games, and other related assets.
The global networks company will house CNN, TNT Sports, Discovery, Discovery+, Bleacher Report, and a portfolio of free-to-air and digital channels across more than 200 countries and territories.
It will also retain up to a 20% stake in the streaming and studios business, which it plans to monetize in a tax-efficient way to help reduce its debt — the bulk of which will remain with global networks.
“We would not be surprised if WBD is able to find a third party that would be interested in the 20% Global Networks stake in Streaming & Studios,” KeyBanc analyst Brandon Nispel wrote on Monday. “We think this potential next transaction would help reduce Global Networks’ debt and unlock value for shareholders.”
WBD split ‘won’t be the last’
Speculation about a breakup has been building over the past year as WBD struggles to cut down its $38 billion debt load, streamline operations, and reignite growth in an increasingly volatile media landscape. The company repaid $2.2 billion in debt during the first quarter, but financial pressures remain high.
Adding to the challenge is a sluggish dealmaking environment. Elevated interest rates and a tougher regulatory climate led to a sharp drop in media M&A activity last year. Hopes for a 2025 rebound have been clouded by fresh uncertainty tied to President Trump’s unpredictable tariff policies, while the Federal Reserve has signaled it won’t consider rate cuts until it sees more clarity on the economic outlook.
Against that backdrop, WBD, which recently underwent a corporate restructuring ahead of Monday’s announcement, now joins a growing list of media giants separating their streaming operations from traditional TV businesses.
Comcast (CMCSA) plans to spin off most of its cable properties into a new company, Versant, later this year. Disney (DIS) has also explored options to divest its linear networks, including ABC, FX, and National Geographic. While CEO Bob Iger has since walked back those comments, analysts say a sale or spin-off could still resurface.
Meanwhile, all eyes are on Paramount (PARA), which is expected to finalize its merger with Skydance Media in the second half of 2025, but the fate of its TV and cable networks remains uncertain.
“[WBD] won’t be the last,” Paul Verna, vice president of content at Emarketer, said. “The diverging fortunes of streaming and traditional pay TV have been unmistakable for years, so it was only a matter of time before the dominoes started falling.”
It’s been a turbulent time for legacy media, which has heavily invested in expensive streaming endeavors amid the mass exodus of pay TV consumers. As a result, once-reliable revenue streams, including linear advertising and cable affiliate fees, have eroded, with advertisers shifting their dollars toward digital platforms instead.
In response, media giants have rolled out ad-supported streaming tiers, raised subscription prices, and experimented with bundled offerings — all while slashing jobs and reevaluating their content portfolios. The result has been a sweeping wave of divestitures and strategic recalibrations across the industry.
“In the case of WBD, the separation is especially striking because the company was formed just over three years ago, taking on massive debt in the process,” Verna added. “Nowhere in the announcement of the merger did any of the principals acknowledge the attrition of the linear TV business, which was painfully evident at the time.”
“Like the recent pivot by WBD to revert back to the previous name of its flagship streaming service, HBO Max, this move reveals a company fumbling its way through disruption.”
Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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