Amid a decline in viewership and advertising dollars in traditional television, Warner Bros. Discovery, the parent company of Atlanta’s legacy Turner brands, said Thursday it is separating its cable networks from its streaming and studio businesses.
The move comes months after WBD took a $9.1 billion write-down on its own book value to reflect the diminishing value of its channels, including TNT, CNN, Cartoon Network and TBS. A write-down, also known as a noncash goodwill impairment charge, often occurs if assets acquired in a deal do not generate the financial results that were expected of them at the time of purchase.
Shares of the company jumped 15% as of noon Thursday.
The new corporate structure is designed to “enhance clarity and focus,” unlock additional shareholder value and allow each division to deliver on specific objectives in an evolving media landscape, WBD said in its release. It will serve as the parent company of the two units, and expects to complete the separation by mid-2025.
The company’s Global Linear Networks unit will focus on maximizing profitability and free cash flow to continue reducing the company’s debt load, according to the release. Its Streaming & Studios unit will focus on driving growth and “strong returns on increasing invested capital.”
WBD is not the first media giant to separate its streaming business from its financially challenged TV networks. Last month, Comcast announced it will offload much of NBCUniversal’s cable portfolio into a separate, publicly traded company. These networks include CNBC, MSNBC, E!, USA Network, SYFY, Oxygen and The Golf Channel.
The move announced Thursday by WBD doesn’t go that far, but it would seem to give the company some flexibility to more easily divest some of its properties if it chose to.
WBD was created in April 2022 through a merger of Discovery Communications and what was then known as WarnerMedia, which at the time was owned by AT&T. The $43 billion deal brought together the Warner Bros. movie studio, HBO, CNN and the other former Turner networks, with channels including Discovery, Food Network and TLC. Between April 2022 and 2024, the company’s stock price declined about 66%.
TNT, TBS, CNN, Cartoon Network and other former Turner channels maintain a major presence in Atlanta where they were founded by Ted Turner.
The merger generated significant debt, reaching $50 billion in the fourth quarter of 2022. In the second quarter of 2024, WBD ended with $41.4 billion of gross debt, having paid down $1.8 billion in April to June period, according to the release.
WBD suffered a blow earlier this year after losing out on a package to broadcast NBA games in the U.S. starting with the 2025-2026 season. Holding rights packages to live sports has become increasingly valuable to media companies because they draw large, consistent audiences.
In a closely-watched media rights saga, the league finalized contracts with Amazon, NBCUniversal and Disney’s ESPN and ABC. The combined value of the new contracts is significantly higher than its current deals with WBD and Disney, which total $1.2 billion per year. The NBA is to receive an estimated $7 billion per year from 2026 through 2036 from its three new partners.
WBD had the option to match a portion of the deal to retain a package of games, but the NBA rejected its bid. Days later, WBD filed a lawsuit against the NBA, alleging it “has breached the agreement and deliberately refused to honor TBS’s rights.”
WBD did not sever its relationship with the NBA entirely. The company secured a package of live game rights in territories outside of the U.S., including Poland, Nordic countries and Latin America, along with licensing rights to produce new and existing NBA content across TNT Sports, Bleacher Report and House of Highlights.
The company also struck a separate partnership with ESPN for TNT Sports to continue producing its marquee studio show, “Inside the NBA,” which is filmed at Turner Broadcasting’s Midtown campus. Beginning with the 2025-26 season, the show will air on ABC and ESPN throughout the regular season and NBA playoffs.
The company has tapped J.P. Morgan, Evercore and Guggenheim Securities to serve as financial advisors, along with Kirkland & Ellis and Wachtell Lipton as legal counsel.
—This is a breaking news story. Return to AJC.com for updates.
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