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Warner Bros. Discovery said that it would be divided into two listed companies on the stock market, separating its studios and streaming activities from its discoloration cable television networks while the parent company of HBO and CNN seeks to improve competition in the streaming era.
The rupture is the last detangling of the decades of media consolidation which have created world conglomerates covering content creation, distribution and, in some cases, telecommunications. It takes place The previous merger of Warnermedia and Discovery In 2022, aimed at developing streaming and studios activities without the declining network unit weighing them.
The new streaming and studios will include Warner Bros., DC Studios and HBO Max – The Crown Jewels of the Warner Bros. entertainment library. Discovery.
The unit of the networks, which will hold up to a 20% participation in its counterpart, will house the CNN, TNT Sports and Bleacher report.
CEO David Zaslav will direct the streaming and studios unit, while CFO Gunnar Wiedenfels will direct the unit of the network. The separation will be structured as a tax deductible transaction and should be completed by mid-2026.
“We continued to analyze how our industry is evolving,” Zaslav told investors. “The right path has become more and more clear … to separate global networks and streaming and studios into two independent companies and listed on the stock market.”
Most of the company’s debt would be owned by the World Company of Networks. Warner Bros. Discovery had a gross debt of $ 38 billion in March. The company said it has obtained an US bridge loan of $ 17.5 billion from JP Morgan that it would use to restructure its debt.
The shares have decreased by almost three% at noon, after having increased by 13% in the hours that followed the ad.
Storage since merger
The actions of Warner Bros. Discovery drops by almost 60% since the merger, injured by the loss of cable subscribers, difficult streaming competition and investors’ concerns concerning the management of the company responsible for debt.
Brian Wieser, CEO of Madison and Wall, a consulting company for the media, technology and other companies, said that the split would not fix the underlying weakness at Warner Bros. Discovery.
If anything, said Wieser, this “could worsen them by promoting financial engineering to focus on improving existing operations or the continuation of new growth opportunities … An agreement like this can Islader the two sides of the company until transactions are concluded”.
The media leaders had initially planned a wave of consolidation under the administration of the American president Donald Trump, although this did not happen.
“For a series of reasons, it turned out to be more difficult than anyone who did not think it,” said Jonathan Miller, a veteran media director who is now Managing Director of Media Integrated. “It seems that the characteristic of this year will be how to put our house in order and do what we can under our control.”
Comcast turns most of its portfolio of NBCUniversal cable networks in a separate companySide. Lions Gate Entertainment finished the separation of its wired Starz network from its movie and television studio in May.
Such a break in the media conglomerates could open the way to another agreement, said a director of the veteran media who spoke under the cover of anonymity.
Last week, around 59% of Warner Bros. shareholders. Discovery during the annual meeting voted against executive compensation packages, including the remuneration of US $ 51.9 million in Zaslav during an advisory vote which marked dissatisfaction.
Like other entertainment companies, Warner Bros. Discovery is struggling with a drop in grades and income in its wired networks. Consumers have abandoned subscriptions on paid television in favor of streaming services.
