Warner Bros Discovery Splits to Boost Streaming Focus Amid Cable Decline

Warner Bros Discovery (NASDAQ:WBD) will split into two publicly traded companies by mid-2026, separating its streaming and studios unit from its struggling cable networks. The move unwinds the 2022 WarnerMedia–Discovery merger, aiming to accelerate growth in streaming and content production while shedding the drag of declining cable revenue.

The new entertainment entity will include Warner Bros, HBO Max, and DC Studios, led by current CEO David Zaslav. The networks division, home to CNN, TNT Sports, and Bleacher Report, will be headed by CFO Gunnar Wiedenfels and retain up to a 20% stake in its streaming counterpart.

The transaction, structured as tax-free, is supported by a $17.5 billion bridge loan from J.P. Morgan, helping restructure WBD’s $38 billion debt. Most of the debt will remain with the networks unit. However, the breakup faces resistance from bondholders reportedly mobilizing through law firm Akin Gump to contest terms restricting investor coordination.

WBD stock dropped nearly 3% after the announcement, reversing earlier gains. Its shares remain down about 60% since the merger, reflecting investor concerns over heavy debt, cable subscriber losses, and fierce streaming competition.

Critics like Madison and Wall CEO Brian Wieser warn the split could distract from operational improvements. Others, like AJ Bell analyst Dan Coatsworth, say the move may attract new investors by focusing on premium streaming.

The rebranded HBO Max, now emphasizing hit titles like The Last of Us and Hacks, had 122 million subscribers in March and targets 150 million by 2026—still behind Netflix and Disney+. The decision mirrors industry trends, including Comcast's spin-off of its cable assets and Lionsgate’s Starz separation, as traditional media firms adapt to digital-first audiences.