Warner Bros Discovery Steps Toward Separating TV Channels From Studios

Warner Bros. Discovery, led by CEO David Zaslav, has become the latest Hollywood studio to rework its corporate structure with an eye toward a possible spinoff of its legacy TV assets.

Warners on Thursday said it was reorganizing its corporate structure into a global linear TV division, separate from its streaming and studios division. The new corporate structure aims to bolster its “strategic flexibility and create potential opportunities to unlock additional shareholder value.” The studio said it will begin the early steps leading toward the new corporate reorganization immediately and expects to complete the initiative by mid-2025.

In a sign of just how embattled the pay TV business is, the move by WBD follows rival Comcast unveiling a plan to spin off its less lucrative cable networks away from its film and TV studio entertainment and parks businesses. Disney CEO Bob Iger has also publicly said his studio’s legacy TV networks, including ABC, “may not be core” to the company.

And Paramount Global’s incoming CEO Jeff Shell said his company’s plan would be to manage CBS “a bit more aggressively for cash flow,” given that linear TV is a “declining business.” At WBD, the plan appears to be spinning off all its linear assets into a separate holding company so that the core of the company can return to growth.

“Since the combination that created Warner Bros. Discovery, we have transformed our business and improved our financial position while providing world class entertainment to global audiences,” WBD president and CEO Zaslav said in a statement.

“We continue to prioritize ensuring our global linear networks business is well positioned to continue to drive free cash flow, while our streaming and studios business focuses on driving growth by telling the world’s most compelling stories. 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,” Zaslav added.

While the cable business used to be a cash driver for studios, the TV channels lately have become a drag on earnings, and investors have dinged companies that have been weighed down by channels tied to bundles that have fast fallen out of out of favor with consumers who’ve spent instead on individual streaming services. Last year, major pay TV companies collectively lost about 5 million subscribers combined and Comcast alone lost 2 million subs, according to Leichtman Research.

Under this new corporate structure, WBD will be the parent company for two distinct operating divisions. The global linear networks will hold the studio’s legacy TV assets, including brands like TNT, TBS and Discovery Channel, together offering content including sports, scripted and unscripted programming.

The separate streaming and studios includes a collection of linear cable TV brands like TNT, TBS and HLN that face headwinds from cord-cutting and an industrywide march toward streaming. As WBD works to uncover the hidden value of key assets, the studio earlier unveiled a massive $9.1 billion goodwill impairment charge to write down the value of its traditional TV networks.  

WBD said it expects “the new corporate structure to enhance clarity and focus, with each division positioned to deliver on its specific strategic and operational objectives while executing on initiatives to further key priorities for consolidated Warner Bros. Discovery.”

The studio added it will “continue to evolve the board to execute its strategy and drive future shareholder value creation.” J.P. Morgan, Evercore and Guggenheim Securities are advising WBD and Kirkland & Ellis and Wachtell Lipton are serving as legal counsel.