Warner Bros. Discovery on Monday said it plans to split itself into two publicly traded companies, with its studio businesses, HBO Max streaming service and prestige HBO network under one company and traditional cable network businesses such as CNN, Discovery and TNT under the other.
The spinoff of what WBD calls its Global Networks business, which includes the Atlanta-based networks founded by Ted Turner, comes just three years after Discovery completed its purchase of WarnerMedia from AT&T, creating a huge company that included properties like CNN, Discovery, TLC, TNT, TBS, the storied Warner Bros. film and television studios and HBO.
Credit: AP
Credit: AP
Now that marriage will soon end. One company will house WBD’s studio and streaming operations, including HBO Max, HBO, DC Studios, Warner Bros. Television and Motion Picture Group, as well as their film and television libraries. Another company, for now referred to as Global Networks, will keeping the traditional cable businesses such as CNN and Discovery, along with WBD’s sports rights properties, free-to-air channels across Europe and digital products such as the Discovery+ streaming service and Bleacher Report.
Each company will have its own board and management team, WBD President and CEO David Zaslav said during a press conference announcing the split. Zaslav will be the top executive of the Streaming & Studios business. Gunnar Wiedenfels, chief financial officer of WBD, will become the top leader of the networks business.
“These companies will be better aligned with shareholders based on each business’ individual dynamics and growth prospects,” Zaslav said during the call. “More agile, more aggressive and creative in pursuing growth, and sharper in their ability to deliver consumers more of the stories and entertainment they demand.”
The separation, which Wiedenfels called a “natural progression for WBD” during the conference call, is expected to be completed in the middle of next year.
Credit: AP
Credit: AP
In December, WBD announced it was splitting its business into two divisions, a move that came months after WBD took a $9.1 billion write-down on its own book value to reflect the diminishing value of its networks. A write-down often occurs if assets acquired in a deal do not generate the financial results that were expected of them at the time of purchase.
An official spinoff was not announced at the time of the December announcement. But the move was seen as one that would make divestitures easier to happen. The unit under which its cable properties will be housed was then named Global Linear Networks, and it was unclear at that time if any streaming properties would be operated under it.
An undisclosed though significant sum of WBD’s $37 billion in debt load will exist with the networks company, Wiedenfels said during the conference. A “not-insignificant portion” will remain with the studio company.
Additionally, Global Networks will retain up to a 20% stake in Streaming & Studios, Wiedenfels said. The retained stake is “designed to enhance [the] deleveraging path” for the networks company.
“The cultural significance of this great company and the impactful stories it has brought to life for more than a century have touched countless people all over the world. It’s a treasured legacy we will proudly continue in this next chapter of our celebrated history,” Zaslav in a press release. “By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape.”
— This is a breaking story and will be updated. Return to ajc.com for updates.
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