Warner Bros Discovery to Separate Cable TV Business

By Deborah Mary Sophia and Aditya Soni

(Reuters) – Warner Bros Discovery (NASDAQ:WBD) on Thursday decided to separate its declining cable TV business from the streaming and studio operations, laying the groundwork for a potential sale or spinoff of its TV business as cord-cutting picks up pace.

Its shares jumped 13% as the company said the new structure would provide more options for value creation at both divisions. It expects to complete the split by mid-2025.

Media companies are considering options for their cable TV businesses as a large-scale shift by consumers toward streaming has slammed growth in traditional TV, which has long been the industry's cash cow.

Comcast (NASDAQ:CMCSA) last month plans to split most of its NBCUniversal cable networks into a new public company, while Comedy Central owner Paramount Global had earlier this year agreed to merge with streaming-era upstart Skydance Media.

Under the new structure for Warner Bros Discovery, broadcast networks like TNT, Animal Planet, and CNN will be housed in a unit called "Global Linear Networks".

Streaming platforms Max and Discovery+ will be under a division along with film studios, including Warner Bros Pictures and New Line Cinema.

> "The structure change would make it easier for WBD to sell off its linear TV networks. However, finding a buyer will be challenging. The networks are in debt and have no signs of growth," eMarketer analyst Ross Benes said.

Warner Bros Discovery wrote down the value of its TV assets by over $9 billion in August due to uncertainty around fees from cable and satellite distributors and sports rights renewals.

The company's gross debt was $40.7 billion as of Sept. 30. While its third-quarter cable TV subscriber base declined 9%, streaming business grew by a better-than-expected 7.2 million users.

CEO David Zaslav said last month he expected the deal-making environment to improve under the incoming Trump administration. "That would provide real positive and accelerated impact on this industry that's needed," he had said.

Zaslav had engaged in merger talks with Paramount late last year, though a deal never materialized, according to a regulatory filing from last month.

The company earlier this week signed a multi-year distribution deal with Comcast that paves the way for the European launch of its Max streaming service and resolves a dispute over an upcoming "Harry Potter" TV series.