Warner Bros. Discovery on Monday announced it is splitting its cable networks portfolio from its movie studio and streaming businesses, in a move that effectively unravels the 2022 merger of AT&T’s WarnerMedia and Discovery Communications.
Per terms of the separation, the “Global Networks” unit—which will include TNT Sports, CNN and a host of lifestyle channels—will be overseen by Gunnar Wiedenfels, who currently serves as chief financial officer of WBD. In a call with Wall Street analysts convened this morning, Wiedenfels indicated the company’s sports rights will remain with the networks group—at least for the near term.
“The U.S. sports rights will reside at the global networks, and its management team will determine how best to monetize the streaming and digital rights over time,” Wiedenfels said. Bleacher Report will also be positioned with the networks group.
WBD president and CEO David Zaslav will head up the “Streaming & Studios” group, which will consist of the TV production unit, Warner Bros. Motion Pictures, DC Studios, HBO and HBO Max.
The split is expected to be finalized by mid-2026.
“It’s safe to assume that the majority of the debt is going to live with global networks,” Wiedenfels said during a Q&A session with analysts, before adding that a “smaller portion, but a not-insignificant portion” would be assigned to the studios and streaming entity. As of the close of the first quarter, WBD’s debt load was $37.4 billion—down from $55 billion at the time of the Warner-Discovery merger.
While neither executive assigned a specific dollar figure to how the debt load will shake out, WBD earlier today said it would take out a $17.5 billion bridge loan from JPMorgan to buy back a portion of its debt. Once the separation is final, the two freestanding entities will issue new debt to pay off the short-term loan.
In the early days of the split, HBO Max will continue to carry live sports content, although that arrangement is subject to change. “Inside the U.S., sports has been less critical; it’s viewed, but it hasn’t been a real driver for us,” Zaslav said. “And so, it will continue to be on HBO Max, but the Global Networks business will evaluate over time where the best place for that is.”
Since the 2022 merger, WBD’s share price has fallen nearly 60%. Ongoing concerns about revenue and cash flow prompted S&P Global to cut the company’s credit rating to BB-plus, or junk status, last month. Shareholders gave Zaslav a symbolic (read: non-binding) thumbs-down last week, when a majority of voters rejected his $51.9 million compensation package.
In a memo issued to WBD staffers Monday morning, Zaslav characterized the Warner-Discovery merger as a win-win. “While the work since that merger has been challenging at times, ultimately, we have succeeded in strengthening each element of our business,” he wrote. “By bringing together the Discovery and Turner networks, we have created a leader in live and unscripted television, with a truly global footprint operating at industry-leading margins.”
Zaslav went on to say that the impetus behind the split was “about unlocking the full potential of two strong businesses.”
While the cable networks continue to get pummeled by the accelerating shift of consumers from the legacy pay-TV bundle to streaming platforms—at the close of 2024, operators were down to 46.9 million bundled video subscribers, down from 103 million at the industry’s high-water mark—Wiedenfels said he’s bullish on the future.
“I have full conviction that we will see very successful networks for many, many years to come,” Wiedenfels told investors. “The desire for people to consume content, especially from recognizable and iconic brands like TNT Sports, Food Network, CNN, etc.—none of that is changing.”
The split facilitates a potential tie-up with Comcast’s own soon-to-be-spunoff portfolio of cable networks, which will be structured into a publicly traded company named Versant. As Wiedenfels noted on the call, hypothetical consolidation may happen immediately after the split is finalized; in other words, the standard two-year waiting period designed to sidestep incurring taxes on a strategic M&A move will not apply here.
Shares of WBD were up 7.38% to $10.55 in early trading Monday.
