Warner Bros Discovery to revamp structure, setting up potential dealmaking

Warner Bros. Discovery said Thursday that it is restructuring into two operating divisions — with one focusing on its struggling legacy cable TV business and the other on streaming and studios — in a rejigger that could set it up for “strategic opportunities” down the road.

The media giant — in what insiders called a sign of optimism that regulations around mergers and acquisitions will be friendlier under the Trump administration — will merge the unit that includes streaming services Max and Discovery+ and HBO with a division that includes movie and TV studio Warner Bros.

The streaming and studios unit will sit alongside the company’s legacy cable unit, which includes networks such as CNN, TNT, TBS, Food Network and HGTV. 

The move comes as the New York-based conglomerate tries to persuade Wall Street that it is set up to compete with entertainment giants like Disney, Netflix, Apple and Amazon.

In a statement, Warner Bros. Discovery Chief Executive Officer David Zaslav said the new structure “better aligns our organization and enhances our flexibility with potential future strategic opportunities across an evolving media landscape.”

Currently, Warner Bros. Discovery has three segments—networks, studios and direct-to-consumer streaming. The CEO said he expects the new structure to be set up by the middle of 2025.

Media companies with cable TV businesses, which are no longer growth engines, are mulling ways to best manage the divisions while still growing.

Last month, Comcast said it will spin off a trove of its cable networks, including MSNBC and CNBC, into a standalone company next year.

While the same strategy has been discussed at Warner Bros. Discovery, it would be a bigger challenge for the company to absorb the financial blow of losing cable profits, The Wall Street Journal reported.

What’s more, Comcast is a larger and more varied business with theme parks and broadband businesses, allowing it to better handle such a move.

Warner Bros. Discovery said it “expects to continue to evolve the Board to execute its strategy and drive future shareholder value creation.”

Warner Bros Discovery’s streaming business is at the center of its growth strategy. The company currently has about 110 million subscribers globally for its streaming services. 

Meanwhile, the company’s cable TV unit has struggled as consumers continue to cut their cable plans in favor of streaming and advertisers shift more of their spending to digital platforms. Earlier this year, Warner took a $9.1 billion write-down on the value of its cable networks.

Despite those challenges, the cable network unit is still the largest revenue generator for the firm.

Through the first nine months of this year, the cable unit posted $15.4 billion in revenue, down 3% from the same period a year ago. 

Since 2022 when Warner Media merged with Discovery to form the media giant, insiders have speculated that the company would eventually be an acquisition target or merge with another firm.

Zaslav explored combining with Paramount Global earlier this year, but Paramount ultimately decided to merge with Skydance Media instead in a deal that is expected to close in the first half of 2025.