Warner Bros Discovery (WBD) has announced a new corporate structure with two key divisions: linear and streaming.
Global Linear Networks will house WBD’s linear channels. Streaming & Studios will be the home of WBD’s streaming, film and entertainment properties. Notably, HBO will also be part of Streaming & Studios, despite having a linear presence.
In a statement, WBD said the restructuring aims to “enhance its strategic flexibility and create potential opportunities to unlock additional shareholder value”.
The company plans for the new structure to be in place by mid-2025.
Shares of WBD were up by more than 12% following the announcement on Thursday.
Analysis: M&A chatter continues
There have been rumours of a split of WBD since the summer. The goal would presumably be to shield more profitable businesses from the underperforming linear unit. In its Q2 earnings, WBD reported a $9.1bn writedown on its TV networks.
In its latest results for Q3, WBD posted a 4% decline in revenue. The TV segment actually grew 3% despite a slowdown in ad revenue, while the studios segment fell 17%.
The bright spot, though, was streaming, which rose 8%, driven by higher global subscribers, advertising revenue and global average revenue per user. This in part helped WBD swing to a profit for the quarter.
In August, the Financial Times reported that WBD was in “informal talks” about potential M&A options.
Comcast announced its own restructure efforts in November. It said it planned to spin off its cable networks, which include USA Network, CNBC and E!, along with “complementary digital assets”, into an independent business known as SpinCo. This keeps NBCUniversal’s broadcast and streaming properties, including Peacock, within the main Comcast.
These key moves set the stage for potential M&A activity in 2025. This wouldn’t be too dissimilar to the start of 2024, when rumours of a merger between WBD and Paramount Global were rife.
WBD CEO David Zaslav said in the statement: “Our new corporate structure better aligns our organisation and enhances our flexibility with potential future strategic opportunities across an evolving media landscape.”
Max strength
WBD has focused much of its efforts on streaming platform Max this year.
Max expanded to Europe in markets including France, the Netherlands and the Nordics earlier during May and June.
Partly as a result of this expansion, in its Q3 earnings WBD announced that Max had gained 7.2m subscribers.
Earlier this month, WBD signed a new distribution and bundle agreement with Sky in the UK. Under the deal, HBO content will move from Sky channels to Max’s ad tier when it launches in the UK in 2026. Max will be bundled into Sky subscriptions, giving Max immediate penetration in the market.
Also in December, it was reported that Max was testing some always-on channels with US ad-free subscribers.
Sport was another area that WBD had targeted during 2024. In February, it announced a streaming venture with Disney’s ESPN and Fox that would aggregate the three companies’ sport offerings.
However, progress of Venu Sports remains slow. In August, a judge laced an injunction halting its launch after rival sport streamer FuboTV filed an antitrust lawsuit against the companies.
