Warner Bros. Discovery is at a financial crossroads, facing a monumental debt of $38 billion stemming from its merger with AT&T in 2018. This situation has prompted CEO David Zaslav to propose a significant restructuring of the company, which includes the creation of two companies: one focused on film and streaming, and the other on traditional television.
Great successes that will not prevent splitting the company in two
Despite the economic difficulties, the studio has performed remarkably in content production. In the past year, it managed to place two films in the top 10 hits, Dune 2 and Godzilla and Kong: the new empire, and has had great success this year with a Minecraft movie. However, these achievements have not alleviated the pressure of its heavy debt.
The new approach from Zaslav includes the return of the HBO Max brand, which had been changed to simply Max a couple of years ago, aiming to strengthen the identity of the streaming service in an increasingly competitive market. With the expectation of reaching 150 million subscribers by 2026, this strategy also focuses on generating 1.3 billion dollars in direct annual profits.
The restructuring will allow the new television company to take on most of the debt, potentially freeing the film and streaming division from financial burdens that have limited its ability to develop and distribute content. Gunnar Wiedenfels, the current CFO, will lead this new entity, and the separation is expected by mid-2026. With this move, Warner hopes to refocus on the quality of its content and avoid drastic decisions such as canceling already completed projects for tax reasons.
It remains to be seen whether this approach will ultimately foster a sustainable recovery for Warner and whether it will manage to avoid the pitfalls of previous mergers. The industry will be watching closely how these next chapters in the company’s history unfold.
