By MICHELLE CHAPMAN AP Business Writer
NEW YORK (AP) — Warner Bros. Discovery will calve off cable operations from its streaming service, creating two independent companies as the number of people “cutting the cord” brings with it a sustained upheaval in the entertainment industry.
HBO, and HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, will become part of the streaming and studios company, Warner Bros. said Monday.
The cable company will include CNN, TNT Sports in the U.S., and Discovery, top free-to-air channels across Europe, and digital products such as the Discovery+ streaming service and Bleacher Report.
Shares jumped 11% at the opening bell.
Warner Bros. Discovery CEO David Zaslav will become serve as CEO of the company that for right now is called Streaming & Studios. Gunnar Wiedenfels, chief financial officer of Warner Bros. Discovery, will be CEO of the cable-focused entity, for now known as Global Networks.
“By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said in a statement.
Just days ago Warner Bros. Discovery shareholders in a vote that was symbolic as it’s nonbinding, rejected the 2024 pay packages of some executives, including Zaslav, who will make more than $51 million.
Warner Bros. Discovery said in December that it was implementing a restructuring plan in which Warner Bros. Discovery would become the parent company for two operating divisions, Global Linear Networks and Streaming & Studios. That was seen as a preview of the separation announced Monday.
Warner Bros. Discovery was created just three years ago when AT&T spun off WarnerMedia and it was merged with Discovery Communications in a $43 billion deal.
The cable industry has been under assault for years from streaming services like Disney, Netflix, Amazon and Warner Bros. own HBO Max. The industry is also being pressured by internet plans offered by mobile phone companies. Comcast, which is of nearly equal size to Charter, spun off many of its cable television networks in November, seeing so many customers swap out their cable TV subscriptions for streaming platforms.
Last month Charter Communications offered to acquire Cox Communications, a $34.5 billion merger that would combine two of the top three cable companies in the U.S.
So-called “cord cutting” has cost the industry millions of customers and left them searching for ways to successfully compete.
The Warner Bros. Discovery split is expected to be completed by the middle of next year. It still needs final approval from the Warner Bros. Discovery board.