Warner Bros Discovery Splits in Two

Warner Bros Discovery confirmed on Monday that it will split into two publicly-listed companies, a Streaming and Studios entity holding Warner Bros film and television, HBO, Max, DC Studios, and the New Line and Castle Rock labels, and a Global Networks entity holding CNN, TNT, TBS, Discovery, Food Network, HGTV, Animal Planet, and the company’s international cable assets. The transaction is targeted to close in the second quarter of 2026.

Chief executive David Zaslav will run the Streaming and Studios company. Chief financial officer Gunnar Wiedenfels moves across to lead Global Networks. Both men retain seats on the respective boards. The structural mechanics are an asset-allocation transaction rather than a conventional spin-off: each share of existing WBD will convert into shares of both successor companies at a ratio to be determined during the regulatory-review period.

The debt allocation

The hinge of the transaction is debt allocation. WBD carries approximately $38 billion in net debt, accumulated largely from the 2022 merger of the original WarnerMedia and Discovery Communications. Under the disclosed terms, Global Networks inherits approximately $17 billion of that debt load. Streaming and Studios takes the remaining $21 billion but also retains the overwhelming majority of the company’s cash flow generation.

That allocation is, in industry terms, specifically favourable to the Streaming and Studios business. Global Networks becomes a heavily-leveraged business managing declining cable properties. Streaming and Studios becomes a leveraged but growing business built around HBO Max, the Warner Bros theatrical slate, and the DC franchise under James Gunn and Peter Safran.

Why now

The WBD board had resisted a split through most of 2023 and 2024, partly on the grounds that Zaslav’s original 2022 merger thesis depended on keeping the cable networks and streaming operations inside a single corporate envelope. The Comcast SpinCo transaction, announced in late 2024 and still in execution, reset the sector precedent. Elliott Management, which had accumulated a position in WBD across the second half of 2024, pushed publicly for an equivalent structure starting in January.

Zaslav resisted the Elliott overtures in the first quarter before reversing in April. The reversal coincided with the release of WBD’s first-quarter earnings, which showed further affiliate-revenue compression at the cable networks and continued HBO Max subscriber growth. The two businesses, inside a single company, were trading at a valuation that penalised the growth side for the decline on the other side. The split resolves that arithmetic.

The HBO Max question

The streaming service, currently branded Max, is in the middle of its own rebrand back to HBO Max, announced earlier in 2025 and scheduled for completion this northern summer. The rebrand is a separate operational matter from the corporate split, but the two are related: Streaming and Studios emerges from the transaction as a company built primarily around HBO Max, which means the rebrand and the split are, in practical terms, parts of the same strategic repositioning.

HBO Max finished 2024 at approximately 117 million global subscribers, per the company’s year-end filings, up from roughly 97 million a year earlier. Subscriber revenue has grown at a faster rate than subscriber count, reflecting price increases that have rolled through the tiered plan structure. Ad-tier growth has been the specific driver of the last twelve months.

What Global Networks inherits

The receiving business on the cable side is a specifically difficult asset. CNN has been restructuring under Mark Thompson since early 2024, with mixed commercial results. Discovery’s flagship unscripted channels, once the group’s cash-flow backbone, face the same affiliate-fee and linear-advertising contractions that drove the Comcast split. The international cable portfolio, which includes Eurosport and a collection of regional networks across Europe, Latin America, and Asia, has been a quiet underperformer against management expectations for several years.

Wiedenfels inherits the task of running this business as a standalone public company with $17 billion in debt. His likely operational posture, based on his public statements during the announcement call, is aggressive cost reduction, selective asset divestiture, and a dividend policy oriented to capital return rather than reinvestment. That is the posture of a company managed for decline, which is, in structural terms, what the business now is.

What to watch

Three things over the next nine months. First, the Global Networks debt-refinancing schedule. Approximately $4 billion of the allocated debt matures in 2026 and 2027, which is specifically aggressive for a cable-networks business in this rate environment. Second, the Streaming and Studios board composition. Elliott will want representation, and the resolution of that negotiation will set the tone for the new entity’s governance. Third, the regulatory posture. The transaction requires clearance from the Federal Communications Commission and the Department of Justice, both of which are operating under a new administration with evolving views on media consolidation.

The next substantive disclosure is scheduled for the WBD second-quarter earnings release in August. The pro-forma financials for the two successor companies will be disclosed at that point.