After a long period of speculation, executives at Warner Bros Discovery (WBD) on Monday confirmed plans to spin off the company’s cable networks unit from its streaming and studios business.
Next year, WBD hopes to complete the formation of a new company that will house CNN, TBS, TNT Sports, the Discovery Channel, Animal Planet, Cartoon Network and other cable networks. For now, the new unit is being called “Global Networks.”
The new Global Networks business will hold as much as 20 percent equity in the second company, referred to now as “Streaming & Studio.” Both companies will likely adopt more-formal names, either closer to the planned separation or once the spin-off is completed. The cable networks business intends to use its equity position in the streaming and studios company to pay down debt.
The move is similar to one being carried out by Comcast right now, which involves the separation of most entertainment and news cable networks — except Bravo — into a new company called Versant.
Like other entertainment companies, WBD and Comcast have faced ongoing pressure from the cable television industry as churn associated with cable and satellite chips away at distribution fee and advertising revenue.
Separating the cable networks business from other units is intended to insulate the more-lucrative parts of both companies from underperforming elements — mainly, cable TV.
At WBD, current CEO David Zaslav is expected to remain in his position as the new head of Streaming & Studio, while WBD Chief Financial Officer Gunnnar Wiedenfels will join the Global Networks business as its CEO.
“We are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said on Monday.
