Top executives at Warner Bros Discovery (WBD) are considering a plan that would split the company’s streaming and studio businesses from its traditional linear television networks, according to a report published by the Financial Times on Thursday.
The report, which is based on unnamed sources at WBD, claims the linear networks could be saddled with the bulk of the company’s $39 billion debt load, which would allow the streaming and studio businesses to operate with an essentially clean financial slate.
WBD’s traditional TV networks include cable channels like the Discovery Channel, Animal Planet, Boomerang, CNN, TBS, TNT, TLC, HGTV, the Cooking Channel, the Cartoon Network, Adult Swim, Motor Trend, Eurosport and New Zealand broadcaster Three. The company also owns the multiplex movie networks HBO and Cinemax.
Streaming businesses owned by WBD include Max (formerly HBO Max), which includes the content libraries of HBO, Discovery Channel, CNN, Cartoon Network, Warner Bros Studios and others; and Discovery Plus.
The potential strategy comes amid a recent note from some analysts at Bank of America, which proferred WBD could boost the equity value of its streaming and studio businesses if it separated them from other parts of the company. The analysts said such a move would likely involve the remaining assets taking on additional debt.
The strategy sounds eerily similar to one employed by Tribune Company in 2014, when it separated its high-performing broadcast television assets from its major metropolitan newspaper division. The newspaper company, initially called Tronc (later Tribune Publishing), was immediately saddled with $350 million in debt. After struggling financially for several years, Tribune Publishing was acquired by Alden Global Management in 2021, which allowed it to shift another $278 million in debt accrued from its other newspaper division, MediaNews Group.
Tribune Publishing continues to operate the Chicago Tribune, New York Daily News and Orlando Sentinel, among other papers; it previously owned the Los Angeles Times and San Diego Union-Tribune, but divested those papers through private sales.
A similar fate could befall legacy brands like CNN, TNT and Animal Planet should WBD move forward with the plan. In the meantime, executives have increasingly looked toward layoffs and consolidation across different business units in an effort to reign in costs. This week, Variety reported WBD was issuing pink slips to around 1,000 workers.
