• Warner Bros. Discovery — the brainchild of media mogul David Zaslav — is splitting up.
• Wall Street had long questioned the wisdom of WBD, and Zaslav now seems to agree.
• While this spinoff was predictable, it sparks questions for other media companies.

The ill-fated marriage between Warner Bros. and Discovery is heading for divorce — and Wall Street is cheering.

Warner Bros. Discovery on Monday announced plans to split its declining TV networks from its growing streaming and studios business. This spinoff proposal comes three years after WBD's inception. If all goes well, the spinoff will happen in mid-2026.

WBD CEO David Zaslav will oversee the sexier streaming part, while CFO Gunnar Wiedenfels — known for delivering "synergies" — will be in charge of the shrinking networks. WBD isn't alone, as Comcast is also splitting from most of its cable assets.

By largely undoing the merger, Zaslav is acknowledging something Wall Street has been saying for a while: WBD's assets are better off apart.

WBD shares were up as much as 13% in early trading. (However, Comcast's stock also popped when its spinoff was announced last fall, and has since fallen more than 20%.)

"The decision to separate Warner Bros. Discovery reflects our belief that each company can now go further and faster apart than they can together," Zaslav said on a call with investors about the spinoff.

When asked for comment, a WBD spokesperson referred Business Insider to comments made by executives on the investor call.

Better late than never

Many media analysts were initially excited when Zaslav orchestrated the deal to form WBD. But they soon soured on the media conglomerate as cord-cutting accelerated and WBD's streamer — Max/HBO Max — missed lofty expectations and failed to truly challenge the likes of Netflix.

Zaslav and company took note. WBD executives telegraphed this spinoff by reorganizing the business late last year, separating the TV networks from its studios and streaming businesses.

Wall Street was pleased by this potential split, which was the key catalyst for WBD's stock's 16% rally in the past month, UBS media analyst John Hodulik told BI last week.

Others agreed.

"Investor excitement for a Warner Bros. Discovery spin-off of its Global Linear Networks is building by the day," Lightshed analysts led by Rich Greenfield wrote last week.

Bank of America's Jessica Reif Ehrlich wrote in an early-June note that a "spin of studios and streaming could be the best way to unlock the significant unrecognized value of the company."

So far, it seems like she's right.

A sign of the times?

WBD's announcement will likely spark more speculation about future reordering of the media and entertainment landscape.

It's long been the expectation among industry insiders that WBD's spun-off linear networks would combine with others, potentially Versant, the linear assets that Comcast is spinning off. Other ideas that have been floated in media circles are a combination with Paramount — assuming its Skydance deal ever gets approved — or with Fox's linear assets.

Reordering is also afoot across the advertising industry. Two giant holding companies, Omnicom Group and Interpublic Group, are in the process of combining. Their peer WPP is replacing its CEO, Mark Read.

One wild card in the mix with WBD is CNN, with President Donald Trump's general hostility to deals involving media companies.

Longtime ad industry analyst Brian Wieser remarked that the news network could be an asset and a liability, given its history and future ability to attract the ire of Trump, who has been aggressive in targeting the mainstream media.

Wieser wrote on Monday that CNN would "probably benefit" from being separated from all of WBD's other assets as it's "the one part of WBD that could tie up other parts of this transaction so long as any government approvals are required to facilitate its completion."

Another question is the fate of WBD's studio business, which has been dragged down. On a call Monday announcing the separation, Zaslav emphasized that the movie business was harder to project than TV. But he said that by leaning into well-known IP, he saw WBD's studios arm becoming a $3 billion business.

The separation also could put WBD's studios business in play, Bernstein's Lauren Yoon said.

The companies that could ingest such a business include Amazon, Disney, Netflix, and Comcast. However, most of the tech companies haven't historically been big acquirers, and the timing isn't ideal.

"No tech companies want to give the government any reason to be in their business," said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investments.

Also, expect Bob Iger to field new questions about what's ahead for Disney's linear and cable networks. He once floated the idea of selling them, though he then retreated from the idea.

Disney's line at the time was that it wouldn't get the price it wanted if it sold those properties and that it'd be too complex to separate them from the rest of the company. Iger and Trump have also sparred in the past, and Disney could look to avoid deals that need government approval.

• Would you like to own CNN, TNT, and the Discovery Channel?
• Warner Bros. Discovery owns them now — but wants to get rid of them.
• WBD's move follows a similar one Comcast announced a few months ago. Because while cable TV networks still make money, they're a business in permanent decline.

No one wants to own cable networks anymore.

Would you like to buy some?

That is the pitch that Warner Bros. Discovery is making to Wall Street now that it has announced it's splitting itself into two companies: One will own Warners' movie and television studio and the HBO Max streaming service; the other — which it's calling its "global networks" unit — will own a bunch of cable TV networks including CNN, TNT, Discovery and the Food Network.

If that sounds familiar, it's for two reasons:

WBD has been contemplating this for a long time.

Last summer, it floated the same idea but didn't go forward with it. In December, it all but said it was going to do this, after all, by splitting itself up internally. Now it's doing it for real.

Comcast is doing the same thing.

Last October, Comcast said it would bundle almost all of its cable channels into a separate company (which it's calling Versant, for some reason) and hang onto its movie and TV studio and its Peacock streaming service.

Like Comcast, WBD insists that no, really, it's splitting off its cable TV networks so they can grow and thrive on their own, and you'd be lucky to buy a piece of them.

"The global networks business is a real business," WBD CEO David Zaslav said on the company's investor call Monday morning.

That is definitely true, since those cable networks continue to generate profits. It's also something you don't normally feel compelled to say when you're selling something people want to buy.

Because the big picture here is that both WBD and Comcast have concluded what investors — and people who watch things on TV — have concluded long ago: The cable TV business is a shrinking business, as more and more people cut the cord or simply never sign up for one. And the people who continue to watch cable TV are getting older and smaller in number.

The WBD split will generate all kinds of questions to ponder. Some of them are technical: How will WBD's $35 billion in debt be split up between the companies? How will the split companies approach future distribution deals with the likes of Comcast and Charter? How quickly could Comcast and WBD combine their two cable groups into one bigger cable group? Will the split help WBD's stock (it's up Monday — but note that Comcast also spiked when it announced its deal last fall, and has fallen some 20% since)?

Some questions the WBD split can generate may also matter to people who don't care about corporate finance. Such as: What does this mean for the future of CNN — the news channel that's struggling to find a lane in a loud and crowded media environment, but whose brand still has lots of potential value?

But the big takeaway is the obvious takeaway: The people who run the biggest collections of cable TV channels in the country would like someone else to own them. Because every quarter, the number of people who watch those channels and pay for those channels gets smaller.

Like I said late last year: These are garage sales. Maybe someone will want to own shrinking businesses that still throw off lots of cash (paging private equity). But the people who have them now think they'd be better off without them. Buyer beware.