Warner Bros. Discovery’s New Corporate Structure Splits Linear Networks, Streaming, Studios

UPDATED with stock movement, additional details. Warner Bros. Discovery is creating a new corporate structure, slimming down from three divisions to two and establishing a clear separation between linear networks and the streaming and studios businesses.

The two new operating units will be called Global Linear Networks and Streaming & Studios.

HBO, even though it still has a linear presence, will be housed in Streaming & Studios.

The move, announced Thursday morning, sent shares of WBD up more than 12% in early trading, putting the beleaguered stock into positive territory for 2024 to date. Speculation about M&A options will only grow after the announcement, which included a nod by CEO David Zaslav to “strategic opportunities.”

Several Wall Street analysts have suggested in recent months that the company consider breaking itself up. The objective of such a move would be to eliminate the financial drag of linear networks, which are losing subscribers and advertising revenue at a steady clip. Last summer, WBD took a $9 billion write down on the value of its cable networks, citing the loss of NBA rights as a key factor. Max, HBO and Warner Bros., meanwhile, have had more positive news of late.

The company is seen as a potential deal partner of NBCUniversal, which recently announced the spinoff of most of its cable network portfolio into a new stand-alone company. Called SpinCo for the time being, the new entity is aiming to formally start operating at the end of 2025. NBCU and Comcast execs have said they see potential for third-party networks to be added to the fold or for joint ventures to take shape involving SpinCo. WBD and Comcast-NBCU have previously held discussions about some form of streaming collaboration, though no agreement has materialized.

In a press release, WBD said the restructuring is “designed to enhance its strategic flexibility and create potential opportunities to unlock additional shareholder value.”

Plans call for the new structure to be in place by mid-2025.

“We continue to prioritize ensuring our Global Linear Networks business is well positioned to continue to drive free cash flow, while our Streaming & Studios business focuses on driving growth by telling the world’s most compelling stories,” CEO David Zaslav said. “Our new corporate structure better aligns our organization and enhances our flexibility with potential future strategic opportunities across an evolving media landscape, help us build on our momentum and create opportunities as we evaluate all avenues to deliver significant shareholder value.”

The company said it also expects to “continue to evolve the board to execute its strategy and drive future shareholder value creation.” The board of WBD has seen a few comings and goings in recent months. Two directors resigned last April, citing federal rules against serving on boards of companies with competing interests. Daniel E. Sanchez, the nephew of major WBD shareholder John Malone, was nominated to a board seat in September after the body voted to expand to 12 members.