January 3, 2025
Warner Bros. Discovery is creating a new corporate structure, reducing the company's three divisions to two and clearly separating its linear networks from its streaming and studio businesses. The two new operating units will be called Global Linear Networks and Streaming & Studios. The Global Linear Networks division will house WBD's linear television business, including networks such as CNN, TBS, TNT, HGTV and the Food Network.
The restructuring comes just weeks after Comcast announced it would spin off its NBCUniversal cable TV networks - including CNBC, MSBNC, E!, Syfy, Golf Channel, USA and Oxygen - into a separate publicly traded company. Linear TV has been in decline as consumers cancel their cable TV subscriptions and subscribe to streaming services. Many analysts argue that WBD and Comcast's ownership of cable networks has held back their share price.
Several Wall Street analysts have suggested in recent months that the company should consider breaking itself up. The goal of such a move would be to eliminate the financial drag of the linear networks, which have been losing subscribers and advertising revenue at a steady pace. Last summer, Warner Bros. Discovery took a $9 billion write-down on the value of its cable networks, citing the loss of NBA rights as a key factor. Max, HBO and Warner Bros. have had more positive news recently.
The company is seen as a potential deal partner for NBCUniversal, which recently announced the spin-off of most of its cable network portfolio into a new stand-alone company. The new entity, tentatively called SpinCo, is expected to formally begin operations by the end of 2025. NBCU and Comcast executives have said they see potential for third-party networks to be added to the networks or for joint ventures involving SpinCo. WBD and Comcast-NBCU have previously held discussions about some form of streaming collaboration, although no deal has materialized.
In an interview with the Financial Times, Bank of America analysts say that the new structure should give the company more flexibility for future strategic actions, such as a strategic spin-off of its studio and streaming assets. The analysts also confirm that WBD's standalone streaming and studio assets would be a very attractive acquisition target for potential shareholder.
The deal actually increases the total fees Comcast will pay to distribute WBD networks, including TNT, CNN and Food Network, although the long-term prospects for cable are a drag on the group's overall finances. WBD believes its new corporate structure will also 'increase optionality to pursue further value creation opportunities for both businesses in an evolving media landscape' the company said in a release.
The market and time will answer all our questions and doubts about WBD's restructuring and future plans. Warner Bros. Discovery is a real giant and what happens to them will have a huge impact on the entire streaming market, so it's good to see them actively working to move forward, developing new strategies and turning ideas into reality.
#SzymonKarbowski #StreamVX #videostreaming #WarnerBrosDiscovery #restructure #LinearTV #streaming
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