Warner Bros Discovery Drops Cable to Chase Streaming Supremacy

“It’s not you, it’s me.” That might as well be Warner Bros. Discovery’s message as it files the paperwork for a strategic breakup, just three years after its headline-grabbing merger. With one eye on debt and the other on streaming supremacy, the entertainment giant is pulling the plug on its short-lived media marriage, and Wall Street’s already got the popcorn ready.

A $43B Blockbuster That Didn’t Age Well

Let’s set the scene. In 2022, AT&T spun off WarnerMedia and merged it with Discovery Inc. in a $43 billion mega-deal that promised to redefine Hollywood’s power players. On paper, it looked like a dream team, thinking Batman meets Shark Week. The goal? Create a media juggernaut that could stand tall against Netflix, Disney, and Amazon. But fast forward to 2025, and that dream has morphed into a reality check. Cable TV is circling the drain, subscriber revenue is sliding, and streaming is a brutal battleground. With Warner Bros. Discovery (WBD) stock now down nearly 60% since the merger, investors are asking: Was the match ever made in heaven?

Cable's Fade, Streaming’s Sizzle

This week, WBD CEO David Zaslav said “cut,” announcing the company will divide into two publicly traded companies by mid-2026:

• Streaming & Studios: Home to HBO Max, Warner Bros. studios, DC Films, and the gaming division.
• Global Networks: Cable brands like CNN, TNT, TBS, and Discovery+, plus a chunk of WBD’s international assets.

Zaslav will lead the Streaming & Studios venture, while CFO Gunnar Wiedenfels, known for slashing costs faster than a horror movie killer, will run Global Networks. The split reflects a blunt truth: it’s tough to sell luxury content and bargain-bin cable under the same roof. By separating its crown jewels (think Succession, The White Lotus, The Last of Us) from its sagging cable channels (sorry CNN), WBD hopes to make each business nimbler and, critically, more appealing to investors. One analyst even put it this way: “Make it less messy so Wall Street can finally read the menu.”

How Financing Plays into the Drama

If you're wondering what's really driving this move, follow the steps. Warner Bros. Discovery is lugging around $38 billion in debt, much of it from the 2022 merger. With S&P recently downgrading that debt to junk status, and 59% of shareholders voting against Zaslav’s $51.9M 2024 pay package, the financial pressure is clear. Here’s the kicker: most of that debt—yes, the heavy lifting—will now live with the Global Networks division. To soften the blow, WBD secured a $17.5 billion bridge loan from JPMorgan, planning to refinance and restructure post-split.

Investors are hoping this will create room for better valuations and maybe even spark M&A opportunities down the road. Rumors are already flying that Comcast’s upcoming cable spinoff, Versant, might cozy up to WBD’s networks unit. And on the streaming side? Don’t be shocked if Peacock and HBO Max start flirting with the industry to dance.

The Media Biz Strategy

This isn’t just WBD’s soap opera. It’s part of a bigger plot twist in the media industry. After years of bulking up through mega-mergers, companies are now trimming the fat. Comcast is splitting up NBCUniversal. Lionsgate spun off Starz. Even Paramount Global is still scrambling to land a dance partner. The WBD split reflects a strategic pivot from consolidation to specialization. In today’s market, a one-size-fits-all media company doesn’t cut it. Streaming demands innovation and deep pockets. Cable needs…well, CPR. By splitting, WBD is hoping to give each business line the freedom (and accountability) to play to its strengths—or, at the very least, stop holding each other back.

Old-School Cable, New-School Strategy

WBD’s breakup doesn’t guarantee success, but it sets the stage for clarity. The Streaming & Studios unit has solid ground: HBO Max has 122 million subscribers and a goal to hit 150 million by 2026. But that’s still trailing Netflix (300+ million) and the Disney-Hulu combo (181 million). So yeah, there’s work to do. As for the Global Networks unit, it still brings in more cash than any other part of the company, but it’s shrinking fast. Cable network revenue fell 6% in Q1 2025 alone. And let’s not forget, Warner just lost its NBA broadcasting rights, once a reliable cash cow for TNT. Internally, execs say the two companies will still play nice on things like ad sales and streaming sports rights. But let’s be real: once the ink dries, both teams will be running their plays. And for finance pros? This split is a case study in how market forces, shareholder pressure, and debt management can drive structural shakeups. WBD’s play is as much about narrative as numbers—positioning itself for future deals, re-ratings, or even divestitures.

Bottom Line

Warner Bros. Discovery isn’t just changing the channel; it’s flipping through the script. The split is being structured as a tax-free deal, which means shareholders won’t feel the burn from Uncle Sam right away. That’s a clean break on paper—but in practice, it all comes down to execution. Will this two-act strategy deliver higher valuations, nimbler deal-making, and leaner debt profiles? Or will it just kick the can down the road while rivals like Netflix and Disney+ keep raking in the ratings? Whether this makes WBD a hit or a flop at the box office of Wall Street is still TBD. But one thing’s clear: the next chapter in this media saga won’t be boring. And at least now, everyone knows which side of the screen they’re on—and who’s picking up the tab. Subscribe to MYCPE ONE Insights and stay ahead of global trends reshaping the financial world, before your competitors do.