Updated inventory movements and additional details. Warner Bros. Discovery has created a new corporate structure, slimming down from three divisions to two and clearly separating its linear network and streaming and studio businesses.
The two new operating units are called Global Linear Networks and Streaming & Studios.
HBO still has a linear presence, but is housed in Streaming & Studios.
The move, announced Thursday morning, sent WBD stock up more than 12% in early trading, pushing the beleaguered stock into positive territory for 2024 so far. Speculation about M&A options has only increased following CEO David Zaslav’s announcement, which included agreeing to a “strategic opportunity.”
Several Wall Street analysts have suggested in recent months that the company was considering breaking up. The purpose of such a move would be to relieve the financial burden on linear networks, which have been steadily losing subscribers and advertising revenue. Last summer, WBD took a $9 billion writedown on the value of its cable network, largely due to the loss of NBA rights. Meanwhile, Maxx, HBO, and Warner Bros. have had more positive news recently.
The company is being viewed as a potential trading partner for NBCUniversal, which recently announced it would spin off a large portion of its cable network portfolio into a new independent company. The new entity, to be called SpinCo for the time being, aims to officially begin operations at the end of 2025. NBCU and Comcast executives said they believe third-party networks could be added to the umbrella or a joint venture could take shape, including: Spin Inc. WBD and Comcast-NBCU have previously held talks about some form of streaming cooperation, but no agreement has materialized.
WBD said in a press release that the reorganization “is aimed at enhancing strategic flexibility and creating potential opportunities to unlock further shareholder value.”
The plan is to have the new structure in place by mid-2025.
CEO David Zaslav said, “While our priority remains to ensure that our Global Linear Networks business is well-positioned to continue to drive free cash flow, our Streaming & Studio business is focused on driving growth by telling the world’s most compelling stories.” “Our new corporate structure better aligns our organization, enhances our flexibility to potential future strategic opportunities across the evolving media landscape, and provides us with the tools to deliver significant shareholder value.” It will help us build momentum and create opportunities as we evaluate our means.”
The company also said it expects to “continue to evolve our board to execute our strategy and drive future shareholder value creation.” WBD’s board of directors has come and gone several times in recent months. Last April, two board members resigned, citing federal rules that prohibit them from serving on the boards of companies with competing interests. Daniel E. Sanchez, nephew of WBD’s majority shareholder John Malone, was appointed to the board seat in September after the company voted to expand WBD’s membership to 12 members.
