Warner Bros. Discovery announced a major restructuring Thursday, a preliminary step that could lead to a breakup of the battered media company.
Investors cheered the news that the company was spinning off its linear networks, including CNN, TBS, Food Network, Cartoon Network and HGTV, into separate units within the company. The move comes after Warner Bros. Discovery took a $9 billion writedown in August to reflect the declining value of its basic cable channels.
The other half of the company will be dedicated to producing films and award-winning television shows and a new direct-to-consumer business. The unit, called Studios & Streaming, consists of Burbank-based Warner Bros. film and TV studios, premium channel HBO and the Max streaming platform.
The move comes less than a month after Comcast announced it would spin off its linear cable channels, including MSNBC, CNBC and USA Network, into separate publicly traded companies. Warner Bros. Discovery doesn’t go that far. At least not yet. That’s because it still relies heavily on revenue from distribution fees from cable channels.
But the company acknowledged in a statement that it had designed the structure to be more flexible “to pursue more value-creating opportunities for both divisions in the evolving media environment.”
Both departments will report to David Zaslav, the company’s CEO following his smaller Discovery programming company’s merger with WarnerMedia in 2022.
“Our new corporate structure better aligns our organization and enhances our flexibility for potential future strategic opportunities across the evolving media landscape,” Zaslav said in a statement. “It helps us build momentum and create opportunities.” .
Shares of Warner Bros. Discovery, which has been on the rise in recent weeks after falling to lows of about $6 per share earlier this year, jumped 15% on the news. In mid-morning trading, shares were trading around $12.20.
“The new corporate structure will improve clarity and focus and position each division to achieve specific strategic and operational objectives,” Warner Bros. Discovery said in a statement.
The streaming and studios segment “will be focused on driving growth and delivering strong returns driven by increased invested capital,” the company said.
