• by Adam Buckman , Featured Columnist, December 16, 2024

A new restructuring plan announced last Thursday by Warner Bros. Discovery basically splits up the management of the company into the old and the new. 

The plan represents an acknowledgement on the company’s part that the legacy cable business and the business of subscription streaming are better managed separately. They are different businesses, each with different goals. 

So, the company and its consultants concluded that unlinking the two is the best way to drive profits on the subscription side and, to the extent it is possible, maintain existing cash flow on the cable side.

Combining streaming with studios makes sense too because a constant flow of primarily scripted content is literally the lifeblood of streaming or, at the very least, that has been the prevailing business model.

WBD’s legacy cable networks are, for the most part, not dependent on scripted production.

“Under this new corporate structure, Warner Bros. Discovery will serve as the parent company for two distinct operating divisions,” the company’s announcement said.

It then went on to define the two. The one that will house WBD’s linear portfolio will be identified as “Global Linear Networks.”

This half of the company will be “a premier linear television business that operates some of the most renowned networks with compelling news, sports, scripted and unscripted programming,” the company said.

This would appear to encompass all of the company’s basic cable channels -- including Animal Planet, Boomerang, Cartoon Network, Discovery, Food Network, HGTV, OWN, CNN, TBS, TLC, TNT, Travel Channel, TruTV and maybe TCM (I’m never sure where commercial-free TCM fits in).

The other new division was identified, rather generically, as “Streaming & Studios.” This will be “a globally scaled streaming platform and storied film and entertainment studios with a portfolio of the world’s most beloved intellectual property,” WBD said.

With this new structure, the company hopes to “enhance clarity and focus, with each division positioned to deliver on its specific strategic and operational objectives while executing on initiatives to further key priorities for consolidated Warner Bros. Discovery.” 

“Global Linear Networks will focus on maximizing profitability and free cash flow to continue deleveraging, while Streaming & Studios will focus on driving growth and strong returns on increasing invested capital.

“The new corporate structure will also increase optionality to pursue further value creation opportunities for both divisions in an evolving media landscape,” said the news release.

I sometimes run these kinds of announcements and statements in full so that readers might also have the experience of reading them. 

As a writer, I am sometimes in awe of these things. To me, they use a lot of words, but the wording they use is so general and generic that I often wonder: What are they really saying here?

The word that stood out to me was “deleveraging” as it pertains to the legacy network group. Being unfamiliar with it, I asked the internet.

Definitions varied slightly on various financial web sites, but my interpretation is that a deleveraging program is a way to manage, reduce or pay off debt, according to the online definitions, by raising capital and/or selling assets.

In the context of its reorganization, WBD may be paving the way for the sale of at least some of the legacy assets -- perhaps ones that lag behind with no perceived potential for growth -- and investing in others.

At the heart of the whole thing is the question that has dogged the big TV companies for quite some time: What to do with all these old basic cable networks?

Comcast’s answer is to spin off its cable networks into a new, separate company called SpinCo. 

WBD’s plan is to separate basic cable from streaming, but not quite spinning off the cable channels into a new company.

No matter how WBD packages its basic cable networks, they are still receding into the past. They are on life support and someday, the cord will be cut.

Above photos: A tale of two divisions: Left: Larry David in “Curb Your Enthusiasm” (HBO and Max). Right: HGTV star David Bromstad of “My Lottery Dream Home.” Photos courtesy of Warner Media.