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David Zaslav, CEO of Warner Bros. Discovery, seen here in 2023,...

David Zaslav, CEO of Warner Bros. Discovery, seen here in 2023, will oversee the company’s studio assets when it splits in two. Credit: TNS/Valerie Macon/AFP

Warner Bros. Discovery will split into two companies by next year, with much of its streaming and movie production moving under one company and its live sports and news to another, according to the Washington Post

The deal, announced Monday, comes just three years after Warner Bros. and Discovery merged in a bid to capture more of the highly competitive streaming market.  As of March, the company reached more than 122 million subscribers, according to its most recent quarterly report.

But now the split means the company’s studio assets — such as Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO and HBO Max — will be spun off into a separate company led by David Zaslav, who is the president and CEO of Warner Bros. Discovery.

Meanwhile, the live TV properties — such as CNN, TNT Sports and Discovery — will be owned by a company run by Gunnar Wiedenfels, who is Warner Bros. Discovery’s chief financial officer.

Here are three things to know about the company split.

Why did the media giant decide to split?

Joe Bonner, senior analyst at Argus Research based in Manhattan, a corporate investment researcher, said Warner Bros. Discovery is trying to separate its growing businesses, which include movies and streaming services, from its shrinking, high-expense cable operations.

“It’s logical in that basically, the streaming and studio are a growth asset, whereas the cable business is a declining cash flow asset,” Bonner said Monday. By separating the two divisions, Bonner said, it’s also possible that the company may soon be “attracting different kind of investors.”

“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,” Zaslav said in a statement on the company's website.

How does the move fall into broader industry trends?

Ric Prentiss, director of telecommunications services research at Raymond James, a St. Petersburg, Florida-based investment bank, said in a written analysis he emailed to Newsday that the Warner Bros. Discovery split falls into a larger theme of “vertical separation,” or the splitting of media companies' cable, streaming and production operations.

Pointing to companies like Comcast, which have announced similar plans, Prentiss said Monday it’s likely that after these spinoffs, there will be a period of mergers and acquisitions. Streaming assets owned by several companies today could end up merging with each other, and the same could go for cable and studio assets.

These moves “could result in significant synergies across the industry and help these companies manage the continued difficult transition from a linear TV world to a streaming world,” he wrote.

Will the spinoff impact cable prices for consumers?

Bonner said it’s unlikely that consumers will see any immediate impact from the split.

“Over the next three to five years, I don’t see much of a change for consumers,” Bonner said, adding that cable customers shouldn’t see any price changes soon. “The agreements with cable companies are all in place. Long term, who knows?”

With The Washington Post

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