Warner Bros. Discovery is set to split into two companies, with one focused on streaming and studios, and the other on global networks. The move, announced in June 2022, will create two separate entities, but the details of how they will operate remain unclear.
The company’s new structure has been met with skepticism from some employees, who are concerned that it will lead to a decade of ownership changes and declining cash flow. According to one employee, WBD’s decision to split itself up is reminiscent of Comcast’s spin-off of its cable TV channels into Versant.
However, the two companies will have distinct economic profiles. The streaming and studios division, led by CEO David Zaslav, will focus on creating a growth business, while the global networks division will try to prop up its linear television networks. This approach has been met with criticism from some analysts, who argue that WBD’s decision is driven by the need to service debt rather than create value.
The spin-off is also seen as an attempt to adapt to the changing media landscape, where cable TV cash is no longer a reliable source of funding. The past 30 years of the entertainment business were funded by cable TV, but now that era is coming to an end.
As the two companies embark on their separate journeys, investors will be watching closely for signs of value creation. Analysts have noted that the streaming and studios division has significant upside potential, while the global networks division faces challenges in reviving its linear television networks.
The split also raises questions about the future of the media industry. As one analyst noted, “We’ve gone from a town to a spreadsheet,” highlighting the shift from creative decision-making to data-driven decision-making. The next chapter in the media industry’s evolution will likely involve a mix of both approaches.
Source: https://www.hollywoodreporter.com/business/business-news/nbcuniversal-warner-bros-discovery-spinoff-versant-1236262097