After restructuring its business divisions internally, Warner Bros. Discovery is seemingly heading towards a split.
According to David Faber, co-host of CNBC’s Squawk on the Street, Warner Bros. Discovery — the corporate home of the Max streaming service and linear cable channels including TNT and TBS — is reportedly eyeing a “split” that could see its linear cable assets spun off from its streaming service and film studio.
“It’s become relatively clear to me from the many conversations that I’ve had that we could get some sort of an announcement in the not too distant future that they are planning to try to split the company,” Faber said on Thursday’s edition of Squawk.
The move wouldn’t be all that surprising. Last month, CNBC’s Alex Sherman reported that the company has hired bankers to explore a spinoff of its cable assets. And in December of last year, WBD internally restructured its businesses to separate its linear portfolio from its streaming and studios division.
As Faber mentioned on Squawk, WBD broke out each segment of its business separately for the first time in its most recent earnings report, typically a sign that a company is eyeing a split or spinoff. The CNBC host did not provide any firm timeline for such a move.
In practice, a split or spinoff would mean approximately the same thing for sports fans: WBD’s current portfolio of linear cable networks that air sports — TNT, TBS, and truTV in the United States — would become a separate business entity outside of the WBD umbrella and have its own corporate structure.
As with Comcast’s impending spinoff of its cable assets, which was recently named Versant, the goal is to offload low or no-growth assets that are a drag on a company’s stock price.
While many industry observers predicted that a potential WBD spinoff could be acquired by the newly-dubbed Versant, that does not appear to be the case. Versant CEO Mark Lazarus recently told CNBC that the company would not be looking to acquire additional cable assets.
That leaves few other potential buyers for a WBD SpinCo. Could Paramount be interested? Perhaps. The company already has a partnership with WBD’s cable assets via the NCAA Men’s Basketball Tournament. But Paramount remains in regulatory hell trying to get its deal with Skydance approved, so any sort of acquisition such as this is likely well on the back-burner for now.
Whatever does eventually happen, some sort of major restructuring looks all but certain for WBD’s cable networks. The questions become where do they end up, and what does it look like for the consumer?