Warner Bros. Discovery will split into two media giants

Warner Bros. Discovery (WBD) has announced that it will be splitting up into two separate media companies. The new structure will see one entity retain Warner Bros. film, television and game studios, along with New Line Cinema, DC Studios, HBO and HBO Max, while the other will hold the company’s full portfolio of live cable channels, which includes many household names like CNN, HGTV, Cartoon Network, Discovery, TCL and others.

In a shareholder deck, WBD refers to these two entities as “WBD Global Networks” and “WBD Streaming & Studios,” and highlights the strengths of each portfolio. The company points out that the newly minted entities would each produce healthy free cash flow and intends for each to be listed as publicly traded companies. This comes just three years after the original merger between WarnerMedia and Discovery.

David Zaslav, the current CEO and president of WBD, will serve as president and CEO of Streaming & Studios. Gunnar Wiedenfels, currently CFO of WBD, will serve as president and CEO of Global Networks. Both remain in their current roles until the separation is complete.

“The cultural significance of this great company and the impactful stories it has brought to life for more than a century have touched countless people all over the world. It’s a treasured legacy we will proudly continue in this next chapter of our celebrated history,” said Zaslav in a statement. “By operating as two distinct and optimized companies in the future, 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.”

In an investor presentation, WBD announced it will be taking a $17.5 billion loan from J.P. Morgan to assist in a cash tender and consent solicitation for all of its approximately$35.5 billion in outstanding bonds. This means it will be buying back some of the bonds while also asking bondholders to loosen their terms, and will offer cash incentives to those who agree to sell or restructure. According to The Hollywood Reporter, the majority of the total debt will be held by Global Networks, while “a not-insignificant portion” will remain with Streaming & Studios. The exact breakdown of the debt at each entity remains to be seen, pending the outcome of the companies' debt restructuring.

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