Warner Bros. Discovery's Long-Predicted Split Is Now Official

Warner Bros. Discovery Inc. WBD gained more than 9% on Monday after announcing plans to split into two independent public companies by mid-2026—one focused on streaming and studios, and the other on global television networks.

The stock gave up all the gains through Monday's trading session

CEO David Zaslav will lead the streaming and studios unit, including HBO, Warner Bros. film assets, and Max. CFO Gunnar Wiedenfels will become CEO of the new network company, which includes CNN, Discovery, and TNT Sports.

The announcement follows an internal reorganization in December 2024 that separated operations into two divisions. At the time, analysts viewed the move as a step toward a potential breakup.

Related: Warner Bros' Streaming Growth, Cost Cuts Highlighted, Analysts Stay Cautious

Throughout 2025, WBD implemented cost-cutting measures and refocused its strategy, shuttering game studios, laying off CNN staff, and doubling down on core IP such as Harry Potter and DC Comics.

Fourth-quarter 2024 results showed strong momentum in streaming, with 6.4 million Max subscriber additions and a 27% increase in ad-lite revenue. However, overall EPS and revenue missed expectations, and analysts cited the company's relatively small scale as a competitive disadvantage risk.

Bank of America analyst Jessica Reif Ehrlich called the May S&P debt downgrade a "strategic positive," noting it removed restrictive covenants that had previously limited corporate restructuring options.

Ehrlich, who had long advocated for a spin-off of the Streaming & Studios segment to unlock value, maintained a Buy rating and projected $38.2 billion in 2025 revenue. She also pointed to DTC growth and a potential advertising recovery as key catalysts.

With Monday's announcement, Warner Bros. Discovery formalized a shift more than a year in the making. The split is expected to provide a sharper strategic focus, enabling the streaming unit to scale its growth while the networks division concentrates on maximizing free cash flow and driving long-term shareholder value.

Investors may also watch media-focused ETFs such as Communication Services Select Sector SPDR Fund XLC and iShares Evolved U.S. Media and Entertainment ETF IEME.

Price Action: WBD shares are trading higher by 2.55% at $9.57 at the last check on Monday.

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