Warner Bros. Discovery

Warner Bros. Discovery, Inc.
Type	Public company
Traded as	Nasdaq: WBD
Industry	Mass media, entertainment
Founded	8 April 2022
Headquarters	New York City, United States
Key people	David Zaslav (Chief Executive Officer)

Warner Bros. Discovery, Inc. is an American multinational mass media and entertainment company headquartered in New York City. It was formed on 8 April 2022 by the combination of WarnerMedia, spun off from AT&T, with Discovery, Inc. Its assets include the Warner Bros. film and television studios, HBO and the streaming service HBO Max, CNN, DC Studios, TNT Sports, Cartoon Network, the Discovery cable networks and a large library of film and television rights.

The company's short existence has been dominated by debt, decline and the attempt to escape both. It was created carrying roughly US$55 billion of borrowing, at the moment when the streaming business model on which its strategy depended was being repriced by investors, and when the cable television networks that generated most of its cash were losing subscribers at an accelerating rate.

In June 2025 the company announced that it would divide itself into two, separating the studios and streaming operations from the declining cable networks. Before that separation could be completed it attracted competing takeover approaches from Paramount Skydance, Netflix and Comcast. On 27 February 2026 Paramount Skydance confirmed an agreement to acquire the whole of Warner Bros. Discovery for US$110 billion. The transaction received clearance from the United States Department of Justice in June 2026 and from the European Commission in July, survived an antitrust suit brought by California and eleven other states, and was cleared to proceed following an out-of-court settlement announced on 21 September 2026.

If completed, the acquisition will merge two of the five major American film studios and represents the largest consolidation in the industry since Disney's purchase of 21st Century Fox in 2019.

Background

Warner Bros.

Warner Bros. was founded in 1923 by the brothers Harry, Albert, Sam and Jack Warner, and established itself with The Jazz Singer in 1927, the film that brought synchronised sound to feature production and ended the silent era. It became one of the major Hollywood studios, known in different periods for gangster films, for the Looney Tunes animation unit, for a run of socially engaged pictures, and latterly for the Harry Potter, DC Comics and Lord of the Rings franchises.

The studio was bought by Seven Arts in 1967, by the Kinney National Company in 1969, and became part of Warner Communications, which merged with Time Inc. in 1990 to create Time Warner. In 2001 Time Warner was acquired by AOL in a transaction valued at about US$165 billion, universally regarded as among the worst mergers ever completed; the combined company wrote off nearly US$100 billion in 2002 and the AOL name was dropped in 2003.

HBO

Home Box Office launched in 1972 as the first American pay television service delivered by satellite, and spent its first two decades showing films after their cinema release. From the late 1990s it produced original drama of a kind network television could not, beginning with Oz and The Sopranos and continuing through The Wire, Deadwood, Game of Thrones and Succession. The brand became the most valuable asset in American television, standing for a particular standard of writing and production, and the slogan "It's not TV. It's HBO." described a genuine distinction.

AT&T and the Time Warner acquisition

AT&T acquired Time Warner in June 2018 for about US$85 billion, having defeated a Department of Justice attempt to block the transaction. The reasoning was that a distributor of content should own the content, a proposition the telecommunications industry has tested repeatedly with poor results. The assets were renamed WarnerMedia.

The venture lasted less than four years. AT&T launched HBO Max in 2020, released the entire 2021 Warner Bros. film slate simultaneously in cinemas and on the service without consulting the film-makers concerned, which caused lasting damage to the studio's relationships in Hollywood, and then concluded that it did not want to be in the media business at all. In May 2021 it agreed to spin WarnerMedia off and merge it with Discovery.

Discovery

Discovery Communications began in 1985 with the Discovery Channel, a cable network showing documentary programming, and expanded into a large portfolio of unscripted networks including Animal Planet, TLC, HGTV, Food Network and the Travel Channel, the latter three acquired with Scripps Networks Interactive in 2018 for about US$14.6 billion. Its business was built on producing inexpensive unscripted programming that performed reliably and travelled well internationally, an approach almost the opposite of HBO's, and it was run with notable financial discipline by David Zaslav.

History

Formation and immediate retrenchment, 2022

The merger completed on 8 April 2022, with AT&T shareholders receiving seventy-one per cent of the new company and Discovery shareholders the remainder. David Zaslav became chief executive. The combined company carried approximately US$55 billion of debt, most of it loaded onto WarnerMedia as part of the spin-off so that AT&T could reduce its own borrowing.

Zaslav's immediate priority was to service that debt, and the measures taken were severe enough to become a subject of public controversy in their own right. CNN+, a streaming news service launched weeks earlier at a cost of several hundred million dollars, was shut down after about a month. The nearly completed film Batgirl, which had cost roughly US$90 million, was abandoned and written off for a tax benefit rather than released, a decision without real precedent for a finished studio film of that budget. Dozens of completed television series and films were removed from HBO Max entirely, in several cases becoming unavailable anywhere, which prompted objections from writers, directors and archivists about the loss of work that existed in no other form. Thousands of jobs were eliminated.

The financial logic was not disputed; the cultural cost was. The period established a public characterisation of the company's management as indifferent to the work it owned, a reputation that complicated its dealings with creative talent for years afterwards.

HBO Max, Max, and back again, 2023 to 2024

In May 2023 the company merged HBO Max with Discovery+ and renamed the combined service Max, removing the HBO name on the reasoning that it signalled a narrow, prestige offering and would deter families seeking unscripted and children's programming. The decision was criticised at the time as discarding the most valuable brand in television to solve a problem that could have been solved with better navigation.

In 2024 the company reversed it, restoring the name HBO Max and acknowledging publicly that the removal had been a mistake. The episode is now cited routinely as a case study in brand equity.

Decline, write-downs and lost sport, 2023 to 2025

The underlying difficulty was structural. The Global Linear Networks division, comprising TNT, TBS, Discovery Channel, Cartoon Network, CNN and the rest, generated the majority of the company's cash flow from distribution fees paid by cable and satellite operators. Those operators were losing subscribers at a rate of several million households a year as viewers cancelled traditional television, and each lost household reduced the company's revenue automatically. Advertising on the same networks declined in parallel.

In August 2024 the company recorded a goodwill impairment of about US$9.1 billion against the value of its cable networks, formally acknowledging that the assets were worth far less than the price implied at the merger.

The most damaging single event was the loss of the National Basketball Association. On 24 July 2024 the league announced new media agreements with Disney, NBCUniversal and Amazon Prime Video beginning with the 2025-26 season, ending an association with TNT that had lasted nearly thirty-six years. WBD had matching rights and litigated over their interpretation, settling in 2025 on terms that kept some international rights and a licensing arrangement for the studio programme Inside the NBA, which was licensed to ESPN. Live sport was the principal reason many households retained a cable subscription, and losing the NBA removed a substantial part of the reason to carry TNT at all.

Smaller transactions continued in parallel. In March 2025 the company agreed to buy a thirty per cent minority stake in the Dubai-based OSN Streaming Limited for US$57 million. In July 2025 it agreed to divest its New Zealand television operations, Three and ThreeNow, to the local competitor Sky Network Television for one dollar, while retaining its subscription television and production operations in the region.

The proposed split, June 2025

On 9 June 2025 the company announced that it would separate into two independent businesses. One, referred to as Warner Bros., would hold the film and television studios, HBO and HBO Max, and would be led by Zaslav. The other, Discovery Global, would hold the cable networks and would be led by the chief financial officer Gunnar Wiedenfels. The transactions were expected to complete by the middle of 2026, were structured to be tax-free, and were arranged so that Discovery Global would assume the great majority of the group's debt.

The logic was the one applied across the media industry at that moment: growing assets and declining assets attract different investors and should not be valued together, and a declining cash-generating business is a reasonable home for debt precisely because its cash flows, while shrinking, are predictable. Comcast had announced a comparable separation of its own cable networks, and the structure had become the standard response to the decline of linear television.

On 10 September 2025 Zaslav confirmed that the split remained on schedule.

The constituent brands in detail

Warner Bros.

The studio was founded in 1923 by four brothers from a Polish Jewish immigrant family who had begun by exhibiting films in Pennsylvania and Ohio. It was the smallest of the major studios in its early years and took the risk that established it: Don Juan in 1926 carried a synchronised score, and The Jazz Singer in 1927 carried synchronised dialogue, and within three years the silent film was finished as a commercial form.

The studio's identity through the 1930s was built on speed, economy and an urban sensibility. Its gangster pictures with James Cagney and Edward G. Robinson, its social problem films, and the Busby Berkeley musicals were produced on tighter budgets and shorter schedules than at Metro-Goldwyn-Mayer, and the house style that resulted, harder-edged and less glamorous, became a recognisable signature. Casablanca in 1942 and The Treasure of the Sierra Madre in 1948 are among the period's best-known productions.

The Looney Tunes and Merrie Melodies animation unit, operating from a building the animators nicknamed Termite Terrace, produced Bugs Bunny, Daffy Duck, Porky Pig and the rest under directors including Chuck Jones, Tex Avery and Friz Freleng, and its work is generally held to have been wittier and more inventive than the contemporaneous Disney output, if less lavishly produced.

Later eras brought the New Hollywood films of the 1970s, the Batman films from 1989, the Harry Potter series from 2001, the Christopher Nolan films including the Dark Knight trilogy and Inception, and the Lord of the Rings and Hobbit films through New Line Cinema. The studio's difficulty in the 2010s and 2020s lay in the DC properties, where repeated changes of strategy produced an inconsistent series of films and where the response, the appointment of James Gunn and Peter Safran in 2022 with a mandate to start again, was the fourth such reset in a decade.

HBO

Home Box Office began transmitting in November 1972 to a few hundred subscribers in Pennsylvania, and became in 1975 the first network to distribute by satellite, a technical decision that created the modern cable industry by making national distribution possible for anyone with a transponder and a dish.

Its programming identity emerged much later. Because subscribers paid directly rather than through advertisers, HBO was not bound by the content restrictions that governed broadcast networks, and from the late 1990s it used that freedom for a run of drama series that changed what television was understood to be capable of. The Sopranos from 1999 is usually identified as the turning point, and The Wire, Six Feet Under, Deadwood, Game of Thrones, The Leftovers and Succession followed. The network also built a documentary unit of unusual standing and a comedy tradition running from The Larry Sanders Show through Curb Your Enthusiasm and Veep.

The brand's value lay in a promise about quality that operated in both directions: subscribers trusted that an HBO programme would be worth watching, and writers and directors brought work there because the network interfered less than others. Both are fragile assets, which is why the decision to remove the name from the streaming service in 2023 attracted such criticism and why its restoration in 2024 was treated as an admission rather than a refinement.

CNN

Cable News Network was founded by Ted Turner in 1980 and was widely expected to fail, since the proposition that anyone would watch news at three in the morning had no precedent. Its reputation was made by coverage of the Challenger disaster in 1986 and decisively by the Gulf War in 1991, when its correspondents in Baghdad broadcast live during the opening bombardment and the network became, for a period, the way the world watched a war.

Its subsequent history has been more difficult. Competition from opinion-led rivals drew audiences away from a network committed, at least in principle, to reporting rather than commentary, and successive managements have oscillated between reinforcing that commitment and diluting it. CNN+ was launched in March 2022 as a subscription streaming news service and closed about a month later, days after the Warner Bros. Discovery merger completed, having reportedly attracted a small fraction of the subscribers required. The prospect of common ownership with CBS News under Paramount was among the specific concerns raised in the California antitrust litigation, on the ground that reducing the number of independently owned national news organisations is a harm distinct from any effect on prices.

Discovery and the unscripted networks

The Discovery networks operate on an entirely different economic model from the scripted businesses. Unscripted programming, whether documentary, home renovation, cookery or true crime, costs a fraction of a drama series per hour, performs reliably rather than spectacularly, repeats well and travels across borders with only dubbing or subtitles. It is the reason Discovery was consistently profitable while more prestigious companies were not, and it is why the combination with WarnerMedia was defended on the grounds that the two portfolios addressed different audiences with different cost structures.

The bidding contest, 2025 to 2026

The announcement of the split had an effect its authors may not have intended: by establishing that the assets were separable, it invited offers for the parts.

On 11 September 2025 the Wall Street Journal reported that David Ellison, who had recently acquired Paramount Global through Skydance Media, was exploring a bid for the whole of Warner Bros. Discovery. Such a combination would bring together two of the five major film studios, Warner Bros. and Paramount Pictures; two streaming services, HBO Max and Paramount+; two sports broadcasters, TNT Sports and CBS Sports; and two national news organisations, CNN and CBS News.

Paramount made several unsolicited offers during October 2025, arguing that they would deliver greater value to shareholders than the proposed separation. On 31 October it was reported that Netflix was actively considering a bid for the studio and streaming business alone, with the company stressing that it remained predominantly focused on organic growth and had no interest in the legacy linear networks. By 20 November Paramount Skydance, Netflix and Comcast were all engaged.

Warner Bros. Discovery initially accepted an offer of about US$72 billion from Netflix for the streaming and studios division, a transaction that valued the whole company at roughly US$82.7 billion. Netflix's co-chief executive Ted Sarandos said the company would have departed from its customary streaming-first approach and maintained theatrical releases for Warner Bros. films.

Paramount pressed the argument that its own offer faced fewer regulatory obstacles, contending that Netflix intended to use Warner's properties to reinforce an already dominant position in streaming and to reduce theatrical releases. It made further hostile offers in December 2025 and February 2026. The February proposal added two unusual terms: Paramount would cover the break fee owed to Netflix, and would pay Warner Bros. Discovery shareholders a ticking fee of approximately US$650 million per quarter if the acquisition had not closed within 2026, a structure intended to demonstrate confidence that regulatory clearance would come quickly.

On 26 February 2026 Warner Bros. Discovery confirmed that it considered Paramount's revised offer superior to Netflix's. Netflix declined to raise its bid, stating that the transaction was no longer financially attractive. On 27 February 2026 Paramount Skydance confirmed an agreement to acquire the whole of Warner Bros. Discovery for US$110 billion, with completion expected no earlier than 30 September 2026. Shareholders approved the sale on 23 April 2026.

Regulatory review and the state antitrust suit, 2026

The combination raised substantial competition questions. It would join two legacy conglomerates and two major studios horizontally, reducing the number of major studios from five to four and concentrating a large share of American box office and cable distribution revenue in one company. Critics also raised concerns about the diversity of news provision, since the merged group would own both CNN and CBS News.

Ellison offered commitments intended to address these concerns: that the combined company would release thirty high-quality theatrical films each year, would maintain exclusive theatrical and home video release windows, would continue acquiring content from third parties, and would allow HBO to operate independently. Paramount's chief legal officer Makan Delrahim, himself a former head of the Department of Justice antitrust division, argued that the transaction would provide the scale required to compete in streaming against Disney and against technology companies such as Amazon and Netflix, and that it would permit an increase rather than a reduction in theatrical output.

The Department of Justice antitrust division approved the transaction on 12 June 2026. The European Commission approved it in July 2026 subject to conditions: Paramount must exit the United International Pictures distribution venture it shared with Universal, must not enter distribution agreements with Universal in the European Economic Area for ten years, and must not enter distribution agreements for Warner Bros. films with certain competitors in the nineteen European territories United International Pictures had served.

On 13 July 2026 California and eleven other states filed suit in the United States District Court for the Northern District of California seeking to halt the acquisition, arguing that control of roughly a quarter of American box office and cable television revenue would give the combined company undue leverage over cinema operators and television distributors, and that it could harm competition by reducing investment and innovation, degrading quality and raising prices.

The response from the exhibition industry was notable. AMC Theatres, Cinemark, Regal Cinemas and the trade association Cinema United all urged Paramount and the California attorney general Rob Bonta to settle, stating that they were confident Ellison would honour his commitments on theatrical release and that a prolonged trial would create damaging uncertainty. The governor of California, Gavin Newsom, also pressed for settlement, arguing that blocking the transaction would harm the state's film industry.

In mid-August 2026 Paramount demanded that the Writers Guild of America and the state plaintiffs post a bond of US$1.8 billion to cover legal and regulatory costs including the ticking fee through to March 2027, citing provisions of the Clayton Act and the Federal Rules of Civil Procedure. Bonta described the demand as blackmail, noting that Paramount had negotiated the ticking fee knowing that the transaction would face antitrust scrutiny.

The Federal Communications Commission approved a waiver for Paramount's increased foreign ownership on 17 September 2026. On 21 September 2026 California announced an out-of-court settlement allowing the acquisition to proceed. Paramount agreed to a five-year consent decree requiring it to honour its commitments on film production, including the thirty-film annual quota and specified levels of spending.

Assets

Warner Bros. Discovery is organised into two divisions.

Streaming and Studios

Warner Bros. Pictures is one of the five major American film studios, with a library exceeding ten thousand feature films. Its franchises include Harry Potter and the associated Wizarding World, The Lord of the Rings and The Hobbit through New Line Cinema, The Matrix, the Conjuring horror series and the Warner Bros. animation catalogue including Looney Tunes and Hanna-Barbera.

DC Studios, placed under the joint leadership of James Gunn and Peter Safran in 2022, controls the DC Comics characters including Superman, Batman and Wonder Woman, and was given a mandate to establish a coherent connected film and television continuity after more than a decade of inconsistent attempts.

Warner Bros. Television produces series for the company's own networks and for third parties and is among the largest suppliers of scripted television in the United States.

HBO remains a premium network and production house, and HBO Max is the streaming service carrying HBO programming alongside Warner Bros. films, Discovery unscripted content and acquired material. The service has grown to well over a hundred million subscribers globally and reached profitability during 2024 and 2025, later than Netflix but earlier than most of its peers.

New Line Cinema, Castle Rock Entertainment, Warner Bros. Animation, Cartoon Network Studios and the games publisher Warner Bros. Games, whose Hogwarts Legacy was among the best-selling titles of 2023, also sit within the division.

Global Linear Networks

CNN, founded by Ted Turner in 1980 as the first twenty-four hour news channel, together with CNN International and HLN.

TNT, TBS and truTV, general entertainment networks whose value was closely tied to sports rights.

Discovery Channel, Animal Planet, TLC, HGTV, Food Network, Investigation Discovery and Travel Channel, the unscripted portfolio.

Cartoon Network and Adult Swim, children's and late-night animation.

Eurosport and a substantial portfolio of international networks, together with discovery+ in markets where it operates separately.

Financial position

The company was created with approximately US$55 billion of debt and reducing it has been the organising constraint of every decision since. Repayment has been substantial, funded by the cash generated by the linear networks and by asset disposals, but the underlying difficulty is that the business paying down the debt is the one in structural decline.

Revenue has fallen year on year through most of the company's existence, driven by distribution fee losses as cable subscriptions decline and by weakness in advertising on those networks. The 2024 impairment of about US$9.1 billion against the cable networks was the formal recognition that assets acquired in 2022 had lost a large part of their value within two years.

Streaming moved from heavy losses to modest profit during 2024 and 2025, and the studio business remained cyclical, dependent on the performance of a small number of large releases each year.

Assessment

Warner Bros. Discovery will probably be remembered as a holding structure rather than a company: an arrangement created to let AT&T exit a business it should not have entered, which inherited that exit's debt and then spent four years trying to survive it.

The assets are genuinely valuable. HBO remains the most respected brand in television. The Warner Bros. library is among the two or three deepest in existence. DC, Harry Potter and Looney Tunes are franchises with a century of accumulated audience. None of these was the problem.

The problem was arithmetic. The company owed US$55 billion, the division generating the cash to repay it was losing several million subscribing households a year, and the division that might grow required investment that servicing the debt made difficult. Every decision that attracted criticism, the shelving of Batgirl, the removal of completed programmes from the service, the closure of CNN+, the reduction of headcount, followed from that position. Whether a different management would have handled the cultural consequences more gracefully is a fair question; whether it could have avoided the underlying choice is doubtful.

Two decisions were self-inflicted. Removing the HBO name from the streaming service discarded the company's single most valuable brand asset and had to be reversed. Losing the National Basketball Association, whatever the merits of the negotiating position, removed the principal reason many households kept the networks that generated most of the company's cash.

The proposed split of June 2025 was a reasonable answer to an unreasonable position, and it proved to be the beginning of the end rather than a solution, because separating the assets made them purchasable. The result is that a hundred years of Warner Bros. and half a century of HBO will, subject to completion, belong to Paramount Skydance, and that the number of major American film studios will fall from five to four.

The broader significance lies there. The consolidation of legacy media in the face of streaming competition has been under way since Disney bought 21st Century Fox in 2019, and the Paramount acquisition of Warner Bros. Discovery is its largest instance. The argument made by both sides of the California litigation, that scale is either the only defence against technology companies or the principal threat to competition and to the diversity of what gets made, is unresolved, and the five-year consent decree agreed in September 2026 is an attempt to have both.

Criticism and controversies

The shelving of completed work

The decision in August 2022 to abandon Batgirl, a finished film costing roughly US$90 million, rather than release it in any form, was without meaningful precedent for a studio production of that scale. The stated reasoning was that the film did not fit the theatrical strategy and that writing it off produced a tax benefit greater than any likely revenue. A second animated film, Scoob! Holiday Haunt, was treated the same way.

The objection was not primarily financial. A completed film represents the work of hundreds of people, and the decision established that such work could be destroyed as an accounting measure. Directors' and writers' organisations objected, and the episode contributed materially to the reputation the company acquired in Hollywood during its first year.

Removal of programming

Dozens of completed series and films were removed from HBO Max in 2022 and 2023 to reduce content amortisation and residual obligations. Several, including original productions made for the service, became unavailable through any channel, since they had never been released physically and were licensed nowhere else. Archivists and critics argued that a library owner destroying access to work in its care is a different act from a retailer discontinuing a product, and the episode became a reference point in a wider argument about the impermanence of material that exists only on streaming services. The company subsequently licensed some of the removed titles to other platforms.

The 2023 strikes

The Writers Guild of America struck from May 2023 and the Screen Actors Guild from July, in the first simultaneous stoppage by both since 1960. The central issues were residual payments from streaming, where viewing data was not disclosed and compensation did not scale with success as it had in broadcast syndication, and the use of generative artificial intelligence in writing and performance.

Warner Bros. Discovery was among the companies at the centre of the dispute, and David Zaslav's compensation was repeatedly cited by strikers as illustrating the gap between executive and creative remuneration. The strikes lasted respectively 148 and 118 days and produced agreements establishing viewership-based bonuses, minimum staffing in writers' rooms and consent requirements for the digital replication of performers.

Editorial independence

Ownership of CNN has raised recurring questions about editorial independence, and the proposed Paramount acquisition intensified them, given that Paramount's own acquisition by Skydance had itself been preceded by a settlement of litigation brought against CBS News by the President and by subsequent changes at that division. The California complaint cited reduction in viewpoint diversity among its concerns, though the legal basis for treating that as an antitrust harm is contested, since competition law in the United States addresses market power rather than editorial breadth.

Executive compensation

Zaslav's remuneration, which reached approximately US$250 million in 2021 largely through equity awards granted on the merger, and which remained among the highest for any American chief executive thereafter, was criticised during a period in which the company eliminated thousands of jobs and reduced content spending. Shareholders registered substantial opposition in advisory votes on pay in 2023 and 2024.

Terminology

Linear television means programming transmitted on a schedule, as distinct from on-demand streaming. Global Linear Networks was the company's name for that part of its business.

Affiliate fee or carriage fee is the monthly amount a cable or satellite operator pays a network for each subscribing household, whether or not anyone in it watches.

Cord-cutting is the cancellation of a traditional television subscription in favour of streaming.

Content amortisation is the accounting treatment by which the cost of producing a film or series is written off over the period it is expected to generate revenue. Removing a title early allows the remaining cost to be recognised at once, which is the mechanism behind the 2022 removals.

Ticking fee is a payment made by an acquirer to a target's shareholders if a transaction has not closed by a specified date, used to compensate for regulatory delay and to signal confidence.

Consent decree is a court-approved settlement in which a party agrees to specified conduct, in this case Paramount's five-year commitments on theatrical film production.

Further reading

• Thomas Schatz, The Genius of the System: Hollywood Filmmaking in the Studio Era (1988), on Warner Bros. in its first decades.
• Bill Carter and others on the modern television business.
• Reporting by the Wall Street Journal and the Financial Times on the 2025 and 2026 bidding contest.
• Filings and decisions of the United States Department of Justice Antitrust Division and the European Commission concerning the Paramount Skydance acquisition.

Context: the collapse of the cable bundle

Warner Bros. Discovery's difficulties are a particularly acute instance of a change affecting every traditional media company, and the mechanism is worth setting out.

How the bundle worked

For roughly forty years, American television was financed by a bundle. A household paid a cable or satellite operator a monthly fee for a package of a hundred or more channels. The operator passed part of that fee to each network as a carriage or affiliate fee, calculated per subscribing household per month, whether or not anyone in the household ever watched that channel. The networks also sold advertising.

The arrangement was extraordinarily profitable for the owners of channels, and it had two features that explain everything that followed. First, revenue was independent of viewing: a network that nobody watched still collected its fee from ninety million households. Second, sport carried the whole structure, because the channels carrying live sport commanded the highest fees and because sport was the principal reason subscribers tolerated a package they did not otherwise want.

What broke it

Streaming broke the link between paying and receiving. A household that cancelled its cable subscription and bought Netflix and one or two other services paid less and, for its own purposes, received more. The number of American households subscribing to traditional television peaked around 2011 at close to a hundred million and has fallen by roughly half since, with the rate of decline accelerating through the 2020s.

For a company such as Warner Bros. Discovery, each departing household removed a small, certain amount of revenue from every one of its networks simultaneously, and there were tens of millions of such departures. Advertising fell alongside, since advertisers follow audiences.

Why the response was so difficult

The obvious answer, to move the programming to streaming, destroyed the economics that funded it. A cable network collected a fee from every subscribing household; a streaming service collects a fee only from households that actively choose it, and must then compete for their attention against every other service. Media companies that moved quickly, as Disney did, spent enormous sums building streaming businesses that took years to reach profitability while cannibalising the cable revenue funding them. Those that moved slowly watched the cable revenue decline anyway.

Sport made the dilemma sharper. Rights costs continued to rise because sport was the one category that retained live audiences, while the platform that could afford them was shrinking. Warner Bros. Discovery's loss of the National Basketball Association to bidders including Amazon illustrated the conclusion: technology companies with other sources of profit could outbid media companies whose only source was the business the rights were meant to protect.

The separation strategy

By the mid-2020s the standard response was structural. Comcast announced a separation of its cable networks; Warner Bros. Discovery announced its own in June 2025; Paramount had itself been sold to Skydance after a similar period of decline. The reasoning was that a declining, cash-generating business and a growing, cash-consuming one should not share a balance sheet, because no single investor wants both, and that the debt belongs with the declining business whose cash flows, though shrinking, are predictable.

The unintended consequence, visible in Warner Bros. Discovery's case within three months, is that separating assets makes them individually acquirable, and that a company which has just announced it is worth more in pieces has invited others to say what the pieces are worth.

Leadership

David Zaslav has been chief executive since the merger. He joined Discovery Communications in 2006 from NBCUniversal and built it from a single-network business into a global portfolio, notably through the Scripps Networks acquisition. His reputation at Discovery was for financial discipline and for making unscripted programming travel internationally. At Warner Bros. Discovery the same discipline was applied to assets with a very different relationship to their audiences and to the people who make them, which is the source of most criticism directed at him. His compensation, among the highest of any American chief executive, became a subject of public comment during the writers' and actors' strikes of 2023 and again during the job reductions.

Gunnar Wiedenfels, chief financial officer, was designated to lead Discovery Global under the proposed separation.

James Gunn and Peter Safran have led DC Studios since 2022.

Casey Bloys has led HBO and HBO Max content, and the continued critical performance of HBO's output through a period of severe cost reduction has been widely attributed to that division's relative insulation from group-level decisions.

Timeline

• 1923 Warner Bros. founded by the Warner brothers.
• 1972 Home Box Office launches as the first satellite-delivered pay television service.
• 1980 CNN launches as the first twenty-four hour news channel.
• 1985 Discovery Channel launches.
• 1990 Time Inc. and Warner Communications merge to form Time Warner.
• 2001 AOL acquires Time Warner for about US$165 billion; the combined company writes off nearly US$100 billion the following year.
• 2018 AT&T completes the acquisition of Time Warner for about US$85 billion; Discovery acquires Scripps Networks Interactive for about US$14.6 billion.
• 2020 HBO Max launched.
• 2021 AT&T agrees to spin off WarnerMedia and merge it with Discovery.
• 2022 Merger completes on 8 April; CNN+ closed; Batgirl shelved; content removed from the service; DC Studios formed under James Gunn and Peter Safran.
• 2023 HBO Max and Discovery+ combined and renamed Max.
• 2024 Max renamed HBO Max after the earlier change is reversed; US$9.1 billion impairment recorded against the cable networks in August; National Basketball Association rights lost on 24 July after nearly 36 years.
• 2025 Split into Warner Bros. and Discovery Global announced on 9 June; OSN Streaming stake acquired in March; New Zealand operations divested in July; Paramount Skydance interest reported on 11 September; competing approaches from Netflix and Comcast through November; Netflix offer of about US$72 billion initially accepted.
• 2026 Paramount deemed superior on 26 February and confirmed at US$110 billion on 27 February; shareholders approve on 23 April; Department of Justice clearance on 12 June; European Commission clearance with conditions in July; California and eleven states sue on 13 July; Federal Communications Commission foreign ownership waiver on 17 September; California settlement announced on 21 September with a five-year consent decree.

See also

• Netflix
• Disney
• Comcast
• David Zaslav
• HBO
• CNN