Warner Bros. Discovery is the latest big corporation to announce that it's splitting itself into smaller parts.
The media giant is breaking up into two publicly-traded companies — one it's calling “streaming and studios,” which will include HBO Max, DC Studios, and the Warner Brothers movie empire. The other is called “global networks,” and it’ll house CNN, TNT Sports, Discovery — its cable brands, basically.
The split is expected to be complete by mid-2026, which is roughly four years after Warner Brothers Discovery came together in the first place.
You could think of the two new companies as New Media versus Old Media. Bloomberg Intelligence analyst Geetha Ranganathan said the streaming side, the “new media,” is a growth investment.
Then there’s old media: “With old media kind of being the TV assets which … there’s not much growth left there,” she said.
The two companies will attract different kinds of investors.
Neal Zuckerman at Boston Consulting Group said some investors are just looking for a stable investment with a decent return — that’s what the cable company could be.
“They used to call it orphans and widow funds. You know what? If I can get 5% dividend or whatever it may be … without any expectation of that going away, that's pretty good for me,” he said.
But other investors want their money to grow. Zuckerman said that’s what the streaming and studios company could deliver.
“There's a different kind of investor that says, ‘I like growth. I want more growth from my companies, and I'm willing to pay a premium for that,’” he said.
This move by Warner Brothers Discovery is similar to one Comcast made last fall, when it announced it was spinning off a number of its cable networks.
Bloomberg’s Ranganathan said we could see some of these new legacy media companies merge together in pursuit of cost savings.
“That is kind of, I think, the ultimate end game. It's going to take us a little bit of time, I think, to get there. But, you know, I think this is obviously the first step,” she said.
What Warner Brothers Discovery and Comcast are doing is almost the opposite of what they were doing five to ten years ago.
“Which was own the content and own the pipes, or the distribution mechanism, all in one,” said Tim Hanlon. He leads the Vertere Group, a media and technology consulting firm.
Hanlon said media companies are now shedding the traditional mechanisms of distribution and the divisions that provide content for them. But he said it’s hard to know if this new strategy will pan out.
“I don't know, if we have this conversation in four or five years, let's see what happens to these entities. I'm not sure that half of what I've said will actually hold up,” Hanlon said.
Because, he said, the media industry changes rapidly.
