On Monday, Warner Bros. Discovery declared their intention to divide into two separate entities in an effort to strengthen their stance in the competitive streaming landscape, particularly in light of the declining traditional cable market.
The massive entertainment corporation plans to divide itself into two separate public entities: one focused on "Streaming & Studios" and another on "Global Networks." This restructuring aims to allow each division to reach its full potential, with completion anticipated by mid-2026, according to the firm’s statement.
This shift, involving the redistribution of assets like HBO Max and CNN, underscores how streaming services are reshaping an industry where companies such as Warner Brothers Discovery once earned significant income from bundled cable packages. Many consumers are increasingly opting for individual streaming options rather than these traditional bundles.
The "Streaming & Studios" entity will encompass the collections from HBO and Warner Bros., as well as studio production facilities located in California and Britain, along with various tours and experiences. According to the firm’s statement, this initiative aims at expanding HBO Max, which currently operates across 77 territories.
The "Global Networks" firm will accommodate Discovery, along with CNN and TNT Sports, renowned for their event broadcasts. This collection of assets presently extends to 1.1 billion viewers spanning 200 countries and regions.
In 2024, the count of paid U.S. cable subscriptions was around 66 million, marking a decrease of 37% since 2010, as reported by market research company IBIS World.
Traditional media firms have found it challenging to convert their main products into successful profit-generating streams through streaming services.
In March 2022, CNN attempted to introduce a subscription-based streaming platform but soon discontinued the project. Nevertheless, Warner Bros. announced their intention to relaunch the initiative this autumn.
This division enables Warner Bros. Discovery's streaming services "to enhance their content without being burdened by the more slowly growing traditional cable sector," according to Briefing.com.
The cable networks continue to generate substantial revenue, yet they face challenges due to significant debts and a decreasing number of subscribers as more people opt out of traditional cable services.
Media industry reinvention
The CEO of Warner Brothers Discovery, David Zaslav, will oversee streaming operations, whereas the company’s CFO, Gunnar Wiedenfels, will be responsible for managing global networks.
"As two separate and strategically agile entities moving forward, we are enabling these legendary brands to achieve greater clarity of purpose and tactical adaptability required for them to thrive competitively within the dynamic media environment of our times," Zaslav stated.
At the beginning of this month, shareholders rejected Zaslav's compensation package, indicating their dissatisfaction with the company's performance. This vote was not legally binding.
During a conference call with analysts, Zaslav expressed his dedication to expanding HBO Max worldwide, calling it "the highest-quality streaming service globally" due to hit shows like "Succession," "The White Lotus," and "The Sopranos."
Executives stated during an analyst conference call that upcoming launches will cover Britain, Ireland, Germany, and Italy.
Warner Bros. Discovery’s decision to divide itself follows Comcast’s announcement in November about splitting off its cable television networks, such as CNBC and MSNBC, into a separate entity.
So far, Disney has launched streaming services like Disney+. Meanwhile, they are exploring the possibility of introducing another stream specifically for their ESPN sports content. However, the firm hasn’t separated its traditional cable channels yet.
Warner Bros. Discovery stated that the deal hinged on certain closure prerequisites, such as receiving confirmation from U.S. taxation officials that the corporate reshuffle would be exempt from taxes.
Warner Brothers Discovery shares dropped by 2.2 percent during the afternoon trade following a morning rally.
Post a Comment