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Warner Bros Discovery will split its business into two publicly traded companies, with one focused on its streaming and studios business and the other on its television network businesses, including CNN and Discovery.
The US media company said the move would unlock value for shareholders as well as create opportunities for both businesses, breaking up a group created just three years ago following the merger of Warner Media and Discovery.
Warner Bros Discovery last year revealed plans to restructure its business into two units, a move first reported as among the options to boost its flagging share price by the Financial Times in July last year. The company intends to complete the split by the middle of next year.
The move comes on the heels of a similar move by rival Comcast, which last year announced plans to spin off its television networks, including CNBC and MSNBC, into a separate company.
US media groups are seeking to split their faster-growing streaming businesses from their once dominant legacy television networks, which are facing the prospect of long-term decline as viewers turn away from traditional television.
Warner Bros Discovery shares were more than 10 per cent higher in pre-market trading.
David Zaslav, chief executive of Warner Bros Discovery, will head the streaming and studios arm, while chief financial officer Gunnar Wiedenfels will serve as president and chief executive of global networks. Both will continue in their present roles until the separation.
Zaslav said on Monday that the split would result in a “sharper focus” and enhanced “strategic flexibility”, which would leave each company better placed to compete in “today’s evolving media landscape”.
Warner Bros Discovery chair Samuel A Di Piazza Jr said the move would “enhance shareholder value”.
The streaming and studios arm will consist of Warner Bros Television, Warner Bros Motion Picture Group, DC Studios, HBO and HBO Max, as well as the group’s film and television libraries.
Warner Bros Games and studio production facilities in Burbank, California, and Leavesden, UK, will also be included in this business. The company said that the focus would be on continuing to grow its streaming service, HBO Max, and invest in HBO’s programmes.
Global networks will include entertainment, sports and news television brands around the world, including CNN, TNT Sports in the US and Discovery.
Warner Bros Discovery also said it would restructure its debt, which has been a drag on its share price, using a $17.5bn bridge facility provided by JPMorgan Chase. This would be refinanced ahead of the planned separation, the company added.
The networks company will own 20 per cent of the streaming business after the split, a stake it planned to “monetize” to help pay down debt.
Rating agency S&P said in a note last month that a separation would “likely pressure” the company’s ratings because it would weaken the individual businesses, particularly the networks arm, due to “ongoing secular pressure in the linear television ecosystem”.
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