Fusion Warnerbros Discovery became a headache – and the medicine was the split

A headache the size of Hollywood megaproduction: This is what has become the historical Warnerbros media conglomerate for his last owners.

In truth, . An opportune correction to start this story.

A week ago, the group formed by the merger between Discovery and Warnermedia in 2022 announced a… split. The rupture scheduled for mid -2026 gives rise to two companies: one composed of television and series studios, as well as the HBO Max streaming service; Another graduate of linear television channels such as CNN, TNT Sports and Discovery.

Named Global Networks, the company consisting primarily of cable television channels maintains a 20% stake of the sister company, called Streaming & Studios, and has the largest responsibility for the group’s $ 34 billion debts.

“This separation will invigorate each company, allowing them to enjoy their specific strengths and financial profiles,” said Warnerbros Discovery CFO, Gunnar Wiedenfels.

Exchanging in kids, the company of the segments, while its counterpart will bring together television channels increasingly harassed by the growing competition of the streaming services themselves in recent decades.

It is a very different result than the current president and CEO of Warner Bros Discovery, David Zaslav, could imagine three years ago, when he agreed to buy the then Warnermedia da AT&T in a negotiation involving more than US $ 40 billion in cash more debt.

Unstable union

Zaslav did something apparently unlikely: ahead of a medium -sized chain network recognized for his low -budget reality shows, he brought intellectual properties such as “Superman”, “Batman”, “Harry Potter” and all the acclaimed HBO series of series.

It was not a super disputed business there. In fact, AT&T had bought Times Warner for less than five years for a value close to $ 100 million. Soon the junction of operations would lead to a shock of business cultures, published the New York Times.

However, the problem went further. By then, an old movie leasing company had already become a problem for its competitors in the media industry. Between 2018 and 2019, Netflix () took home some of the Hitmacers From Hollywood such as Ryan Murphy and Shonda Rhimes for contracts at the house of hundreds of millions – and emerging streaming platforms vied for Popular Productions to include in their portfolios.

Warnermedia itself in 2019 even paid $ 1 billion for HBO Max’s five -year exclusivity in the streaming of The Big Bang Theory series, reported specialized vehicles at the time.

It made sense, for some media executives, that an endless catalog of productions was the formula for curbing Netflix’s advance in the “War of Streamings.” But in 2022, the newly created Warnerbros Discovery decided to reformulate the brand “HBO Max” to simply “Max”. After all, streaming users could navigate from productions such as “Soprano Family”, “Succession” or “Game of Thrones” to reality shows from Food Network, hitherto hosted on Discovery+.

More than that, they would be attracted by HBO titles and convinced to continue paying their tuition for the variety of the menu combined with Discovery programs.

But it was missing to match the audience. The audience really wanted to attend a mobster therapy sessions in New Jersei, the extravagant succession of the media industry, and the violent battles among medieval families in the fantastic world of Westeros.

In May this year ,. No “Max”, the name is “HBO Max”. “Today, we are bringing back to HBO, the brand that represents the highest quality in media, to further accelerate this growth in the coming years,” Zaslav said in a company event.

Back to the Future

The return to the origins had its reasons: Zaslav failed to achieve the scale of its main competitors, Netflix and Disney+ (), although the results of streaming under their management have improved. The feeling between media companies has also spread that their linear TV actives have become a “trambolho” generator of discouraging future revenue.

“The split highlights a broader change in the media: conglomerates are
dismantling as the cable TV subscriptions accelerate.
Fundamentally, Netflix’s pure model still runs a price ratio for future profit [indicador de preços de ações] More than triple of WBD, ”says a Mirabaud report gathering analysts’ impressions.

The bet of some analysts is that this division may attribute a prize similar to Netflix to the new fastest growth division on streamings, Mirabaud points out.

Despite the comings and goings during the Zaslav period ahead of Warnerbros Discovery, HBO Max (or Max, depending on the year), became profitable again and added, only by 2024, 22 million new subscribers to its base.

EBITDA (English for profits before interest, taxes, depreciation and amortization), an important operating result indicator from $ 1.6 billion in 2022 to $ 677 million positive in 2024. In the studio segment, Warner amended two of the three largest household boxes in 2025 with “a minecraft film” and “sin”, after a 20% growth in the segment’s EBITDA by 2024.

Setor the streamings

More optimistic analysts believe the division would allow the high growth streamings & Studio segment to follow the pace of investments, while the channel unit equals debts of more than $ 30 billion, the Mirabaud report points out.

A similar strategy was adopted by NBCuniversal controller, announcing in 2024 that it would give up five television channels whose annual revenue was $ 7 billion per year.

Another group of experts is more skeptical of split. If the streaming & Studio company may lead to an investor prize, the Global Networks unit would have the burden of debt and create a kind of “bad bank“, Entity intended to control problematic assets.

And to maintain the pace of attractive productions, the operation of streamings and studios would need to continue dealing with compressed cash flow margins. By 2023, the amount available for investments in Warnerbros Discovery was $ 6 billion, and fell to $ 4.4 billion in 2024.

Since the announcement about the division, Warnerbros Discovery stock has valued about 12%. It is a growth that is not even close to compensating for the 60% drop noted by the papers since the merger between Warnermedia and Discovery in 2022.

On Monday (16), the media giant stated that a sufficient number of creditors supported the business division plan. By the proposal, the company gathering HBO Max and studios would have David Zaslav as CEO. CFO Gunnar Wiedenfels would occupy the chair of president in the media segment.