(Reuters) -Warner Bros Discovery is moving towards a potential breakup, CNBC reported on Thursday, as media companies explore options for their struggling cable TV businesses and sharpen focus on their faster-growing streaming and studios divisions.
WBD shares surged more than 4% on the news, rebounding from earlier losses of nearly 6% that were triggered by a dour quarterly report.
The company missed first-quarter revenue estimates and posted a larger-than-expected loss earlier in the day due to a sluggish box office performance and ongoing declines in cable.
The media industry is going through what some executives have called a “general disruption” as millions of subscribers abandon the once-lucrative cable TV for streaming. That has piled pressure on companies to consistently produce hit studio content and boost profitability in their streaming businesses.
WBD had laid the groundwork for a possible sale or spinoff of its declining cable TV assets in December by announcing a separation from its streaming and studio operations. It reported results under the new structure for the first time on Thursday.
A split will align the company with Comcast, which is spinning off most of its cable TV networks such as MSNBC and CNBC to position itself for growth in the streaming era.
Analysts have long speculated about a break-up of WBD, formed by the 2022 merger between Warner Media and Discovery.
“WBD would be leaner and have stronger growth potential without cable assets. But finding a buyer could be difficult. Linear TV is deteriorating and WBD has big debts,” said eMarketer analyst Ross Benes.
WBD, which has $38 billion of gross debt, did not respond to a Reuters request for comment on the CNBC report.
STREAMING BOOMS, STUDIO DISAPPOINTS
Its CEO David Zaslav said on Thursday the company’s programming strength was helping Max attract subscribers in a crowded market for streaming services.
WBD added 5.3 million streaming subscribers in the January-March quarter, more than the 3.1 million estimated by analysts, taking its total to 122.3 million. Its content slate in the period included the third season of HBO’s “The White Lotus” and the medical drama series “The Pitt”.
Still, its results were hampered by a weak showing at the box office as WBD struggled to replicate the success of last year’s “Dune: Part Two,” which grossed more than $700 million. Its marquee release for the period, Bong Joon Ho’s sci-fi dark comedy “Mickey 17,” earned only slightly more than its reported budget at the box office.
Studio revenue fell 18% to $2.31 billion, missing estimates of $2.73 billion, according to Visible Alpha.
The company has, however, made a strong start to the second quarter with Ryan Coogler’s horror film “Sinners” and the blockbuster “A Minecraft Movie,” which has raked in around $900 million globally, making it the biggest release of 2025 so far.
Revenue at the TV networks segment, which includes CNN, Discovery Channel and Animal Planet, fell 7%.
Overall, revenue fell 10% to $8.98 billion, missing analysts’ average estimate of $9.60 billion, according to data compiled by LSEG. Loss of 18 cents per share was also larger than expectations for a 13 cent loss.
(Reporting by Aditya Soni in Bengaluru; Editing by Shounak Dasgupta)
