Warner Bros Discovery has announced plans to separate its shrinking cable TV businesses, such as CNN, from its streaming and studio operations, including Max. This move is seen as a step towards a potential sale or spinoff of its TV division as more viewers continue to cut the cord in favour of streaming services.
The company’s stock price rose sharply following the announcement, with shares climbing over 15% to close at $12.49. Warner stated that the new structure would make it more attractive for future deals, and it expects to complete the split by mid-2025.
As the cable TV sector faces a decline in revenue, media companies like Warner Bros Discovery are exploring options for their traditional TV businesses. The rise of streaming services has dramatically reduced cable subscriptions, leading to shrinking profits for cable networks.
Bank of America analyst Jessica Reif Ehrlich noted that combining Warner’s linear networks with those of Comcast could offer “fairly sizable synergies.” She was referring to traditional television channels, which are increasingly seen as outdated in comparison to the rapid growth of streaming.
Warner Bros Discovery also announced a new multi-year deal with Comcast, which will pay higher fees to distribute the company’s networks. Warner is hoping that this agreement, along with an earlier deal made with cable and broadband provider Charter, will serve as a model for future negotiations with other distributors. The company believes this approach could help stabilise pricing in the domestic pay TV market, which has been under pressure from the shift to digital viewing.