Warner Bros Discovery to revamp structure, setting up potential dealmaking

Company Restructuring - Warner Bros Discovery is restructuring into two operating divisions: one focusing on legacy cable TV and the other on streaming and studios [1] - The streaming and studios unit will include Max, Discovery+, HBO, and Warner Bros studios, while the legacy cable unit will include networks like CNN, TNT, TBS, Food Network, and HGTV [2][3] - The new structure aims to better align the organization and enhance flexibility for future strategic opportunities in the evolving media landscape [4] - The restructuring is expected to be completed by mid-2025 [4] Streaming and Growth Strategy - Streaming services HBO and Discovery+ are central to the company's growth strategy [8] - The company currently has approximately 110 million global subscribers for its streaming services [9] - The restructuring separates the struggling cable business from the streaming and studios businesses to better compete with entertainment giants like Disney, Netflix, Apple, and Amazon [3][4] Cable TV Challenges - The cable TV unit has struggled as consumers shift from cable plans to streaming and advertisers move spending to digital platforms [10] - Earlier this year, the company took a $9.1 billion write-down on the value of its cable networks [10] - Despite challenges, the cable network unit remains the largest revenue generator, posting $15.4 billion in revenue in the first nine months of this year, down 3% year-over-year [12] Industry Trends and Strategic Opportunities - Media companies with cable TV businesses are exploring ways to manage declining divisions while focusing on growth areas [5] - The restructuring could position the company for future strategic opportunities, including potential mergers or acquisitions [1][11] - The company previously explored combining with Paramount Global, but Paramount opted to merge with Skydance Media instead, with the deal expected to close in the first half of 2025 [13] Market Speculation - Since the 2022 merger of Warner Media and Discovery, there has been speculation that the company could become an acquisition target or merge with another firm [12]