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| Warner Bros. breaks into two |
CNN has announced that its parent company, Warner Bros. Discovery, is ready to split. The entertainment company has decided to unmerge the merger that came up between "Warner Bros." and "Discovery". The merger birthed Warner Bros. Discovery in 2022.
The split will birth two publicly traded companies by mid-2026, separating its streaming and studio operations from its cable television networks. The company explains that it'll isolate Discovery+, Bleacher Reporter, and Warner’s TV channels (which includes CNN, TNT, and TBS) from part of the company's Streaming & Studios department.
While the ones isolated will be under newly created company called "Global Network", the Film Studios and Streaming Services of the company will remain under Warner Bros., the department that will house Warner Bros., HBO, DC Studios, and Max under the control and supervision of the current CEO David Zaslav.
The Global Networks will be led by CFO Gunnar Wiedenfels, and Warner Bros. will retain up to a 20% stake in the entity to manage its $37 billion debt. This split is not new in media industry. We've also seen Comcast and Lionsgate unmerged their streaming services from traditional TV to adapt to industry shifts.
Why the Warner Bros. Discovery split?
According to some executives at Warner Bros. Discovery, they're separating the company into two so that both separated companies can concentrate on their primary operations and unlock additional opportunities for strategic partnerships.
They also noted that while the separation does matter in terms of deal making opportunities, both companies will still be partially interconnected in operations and finances.
However, some observers believe Warner might be looking to sell Global Networks as cable TV market continues to decline in relevance, and streaming sector continues to take it place.
Last year, Warner reduced the valuation of its TV networks by $9.1 billion, while HBO attracted avid viewers with high-quality shows such as The White Lotus and The Pitt. The company's stock surged 9% after the announcement of the splitting.
