On Monday Warner Bros. Discovery announced its decision to split into two companies, separating its studio and streaming businesses from its declining cable television channels, aiming to better adapt to the streaming era and strengthen its competitiveness against industry giants.

The move marks a new chapter in the gradual dismantling of media conglomerates formed over decades, integrating content creation, distribution and sometimes even telecommunications infrastructure.

The strategic reorganization aims to unlock the growth potential of the streaming unit by allowing it to capitalize on the studios' flagship productions while freeing itself from the growing burden of declining cable channels.

The group's current CEO, David Zaslav, will head the entity combining the streaming and production businesses. Chief Financial Officer Gunnar Wiedenfels will lead the new division dedicated to global television channels.

"By operating as two distinct and optimized businesses, we are giving these iconic brands the strategic focus and flexibility they need to best navigate an ever-changing media landscape," Zaslav said.

The split, which will take the form of a tax-neutral transaction, is expected to be completed by mid-2026. It comes two years after the merger between WarnerMedia and Discovery in 2022. Upon the announcement of this news, Warner Bros Discovery's stock rose nearly 6% in pre-market trading.

In December, the company had already begun an operational separation of its cable distribution business, paving the way for a sale or IPO. The move puts it in line with Comcast, which is also preparing to spin off a large portion of its cable channels, including MSNBC and CNBC.

According to Bank of America analyst Jessica Reif Ehrlich, Warner Bros Discovery's television assets would be a "very logical" partner for the new entity resulting from the Comcast split.

Warner Brothers Discovery also launched several debt buyback offers on Monday as part of a refinancing transaction structured around a $17.5bn bridge loan provided by J.P. Morgan. This bridge loan is expected to be refinanced prior to the effective separation.

The group said that the "global networks" unit will retain up to 20% of the capital of the future "studios and streaming" entity, a stake that could be monetized to further reduce debt.

J.P. Morgan and Evercore are advising WBD on this transaction, while Kirkland & Ellis is providing legal support.