New York, N.Y. — Warner Bros. Discovery, the parent company overseeing popular brands like HBO Max and CNN, revealed plans on Monday to split into two distinct companies by mid-2024. This significant restructuring comes as major media players adapt to a rapidly changing audience landscape driven by shifting viewing habits.
The separation will result in one entity focusing on Warner’s film and streaming operations, which feature HBO Max and the DC Comics franchise. This new arm will be led by Chief Executive Officer David Zaslav. The second company will encompass Warner’s television networks, including CNN and Discovery, with Chief Financial Officer Gunnar Wiedenfels at the helm. This division will also be responsible for carrying most of Warner Bros. Discovery’s existing debt.
Zaslav expressed that creating two focused companies will provide the iconic brands under Warner Bros. Discovery with the necessary agility to remain competitive in an evolving media market. The decision reflects broader trends in the television industry, where traditional cable networks are facing significant challenges from the rise of streaming platforms and social media alternatives like TikTok.
The move mimics a recent decision by Comcast to spin off its cable networks, including CNBC and MSNBC, into a separate unit called Versant, indicating a wave of consolidation in legacy television as both companies look to solidify their positions in the market.
Speculation about a potential split at Warner Bros. Discovery had been circulating, particularly as Zaslav sought to stabilize the company’s finances. In December, a significant restructuring was announced, which many observers viewed as a precursor to this forthcoming separation.
Zaslav’s time leading Warner Bros. Discovery has been tumultuous since its formation in 2022. Shortly after its establishment, discussions arose about a possible sale, and Zaslav faced criticism for canceling several nearly completed film projects and for the abrupt end of Chris Licht’s tenure as chairman and CEO of CNN after just one year.
As the company announces these changes, the performance of its stock has been under scrutiny; shares have fallen dramatically, nearly 60% since Zaslav took the reins. Initial trading on Monday saw shares rise by 11% before turning negative later in the day.
Bank of America analysts recently noted that Warner Bros. Discovery was “not functioning effectively as a publicly traded company,” suggesting that more transformative changes may be necessary despite recognizing the substantial value in its core media assets.
During a call with investors on Monday morning, Zaslav also discussed the future of the company’s streaming sports initiatives, acknowledging they have not been effective in their current location on HBO Max. This comes on the heels of losing NBA streaming rights to both NBCUniversal and Amazon’s Prime Video, signaling a need for strategic reevaluation in this area.
