Warner Bros. Discovery stock surges as it restructures its business

CNN
 — 

Warner Bros. Discovery, CNN’s corporate parent, announced Thursday it is establishing a new corporate structure that splits off its cable networks from its growing streaming business.

The restructuring is not a spinoff of cable assets in the way that Comcast recently announced, but it may ultimately have the same effect.

Warner Bros. Discovery will have two separate operating divisions: “Global Linear Networks” for CNN, TBS, TNT and other cable networks, and “Streaming & Studios” for Max and the company’s film and entertainment studios.

The company said the changes will take effect by mid-2025. Shares of Warner Bros. Discovery (WBD) ended the day more than 15% higher.

The new structure will give Warner Bros. Discovery more “flexibility with potential future strategic opportunities across an evolving media landscape,” CEO David Zaslav said in a press release.

Wall Street analysts have been anticipating merger and acquisition activity across the cable television industry contracts in the streaming era, particularly as President-elect Donald Trump takes office with a deregulation agenda.

In a note on Thursday, MoffettNathanson senior research analyst Robert Fishman likened the deal environment to a game of chess — “a struggle for victory that often runs through an intermediate struggle for control of the board’s center.”

“The question is not whether more pieces will be moved around or knocked off the board or if further consolidation will happen — it is a matter of who is the buyer and who is the seller,” Fishman wrote. “The center of the board still remains very much open for the taking.”

Investors on Thursday seemed to cheer Zaslav’s willingness to strike deals — or “strategic opportunities,” as he put it.

One asset sale was announced Thursday afternoon: Hearst Magazines said it was buying MotorTrend Group from Warner Bros. Discovery. The terms were not disclosed.