In announcing its long-anticipated split into separate movie studio and cable companies, Warner Bros. Discovery sent a loud and clear message to Wall Street and Hollywood: They’re open to dealmaking.
Wall Street has already begun dreaming up all kinds of scenarios ahead of the official separation in mid-2026, from private equity and Versant making a run at cable channels like TNT Sports and CNN to Comcast, Apple and Amazon taking a look at acquiring Warner Bros. Studios and HBO.
“Even though the talk is spinning these off into standalone, publicly traded companies, you’ve essentially put a for sale sign up,” S&P Global analyst Naveen Sarma said.
But analysts and Wall Street experts who spoke to TheWrap expressed skepticism about the likelihood of short-term M&A following the split, given the current regulatory climate under the Trump administration that has seen increased scrutiny on Big Tech and legacy media.
“For almost everybody you could think of, there’s some reason that a sale is going to be complicated,” said Howard Homonoff, a strategic advisor to media and tech companies and managing director of Homonoff Media Group. “I don’t think there’s easy, immediate sales even if that’s what they wanted to do.”
But Homonoff also said he doesn’t see CEO David Zaslav simply stepping away and giving the studios and streaming business to the highest bidder.
Others agreed. A long-time cable executive who asked to remain anonymous said that a sale of Warner Bros studios and the streaming business would only be likely if there’s “a wall that he hits on growth that just makes it impossible for him to be able to show shareholders he has a way of driving value.”
Sarma, who is opposed to the idea of spinning off linear networks, doesn’t see the company’s cable assets lasting long-term as a standalone company and believes its best chance is with private equity. He warned that a roll-up with Comcast’s Versant — a move Wall Street has repeatedly floated — doesn’t solve the industry’s underlying secular decline.
“It makes them bigger companies where you get some synergies by cutting overhead, duplicative jobs, ad sales and then after like, two years, you’ve worn through your synergies, your revenue is still coming down and your EBITDA (earnings before interest, taxes, depreciation and amortization) is also coming down and you have to go do another deal,” he said. “You saw this with the telecom companies back around 2000 to 2005. There was a ton of consolidation but none of them got any better. They just got bigger in the same declining ecosystem.”
During a call with investors last week, chief financial officer Gunnar Wiedenfels said both the global linear networks and streaming and studios businesses will be “free and clear from a transaction perspective” by the time the split is official in mid-2026.
“We do believe the transaction provides each business with greater agility to capitalize on potential options and opportunities that may arise,” Wiedenfels, who will lead the global networks business as CEO post-separation, said. “I also want to stress there’s no such plan and I love the asset perimeter of both companies.”
Warner Bros. Discovery has seen its shares fall around 50% since the 2022 merger and is the latest media company to split up its assets in an attempt to boost value for shareholders, following Comcast with Versant and Lionsgate with Starz.
A spokesperson for Warner Bros. Discovery declined to comment for this story.
***
Studios and streaming: an attractive acquisition target
Following the split, the studios and streaming business will include Warner Bros. Television Group, Warner Bros. Motion Picture Group, DC Studios, HBO, HBO Max, Warner Bros. Games, Tours, Retail and Experiences, as well as studio production facilities in Burbank and Leavesden.
Executives have said that streaming and studios would focus on continuing to scale HBO Max, which is available in 77 markets with launches in the U.K., Ireland, Germany and Italy planned in 2026, and returning the studios business to consistent profitability.
The streaming business is expected to generate at least $1.3 billion in profit by the end of 2025 and reach at least 150 million streaming subscribers by the end of 2026, which it also plans to achieve through strategic distribution partnerships and driving higher penetration of its ad-supported tier. Meanwhile, the studios business is targeting at least $3 billion in annual profit, though a specific timeline for achieving that is unclear.
The long-time cable executive said that three years is a lifetime in the current climate.
“There’s so many possibilities three years out as to how AI players that are involved with some of these video models view next generation video distribution and how it works, or maybe doesn’t work at all,” he observed, “You may find companies emerging that have interesting, possible combinations of that sort.”
He added that a new kind of acquirer may emerge for WBD’s streaming and studio assets in that time. “It’s more likely to be the kind of player that develops three years from now, after Zaslav has seen whether he has a hand to play or not,” he said. “And if he doesn’t by then, [it becomes a question of] who’s out there that it matters most for.”
Barclays analyst Kanaan Venkateshwar estimates that the studios and streaming business could be valued at $30 billion to $40 billion, higher than the entire company’s current market cap of $26 billion. He sees Warner Bros. and HBO receiving interest from the likes of tech giants such as Apple, Netflix and Amazon, but believes the best fit would be with Comcast, pointing out that any volatility in its studio business would be offset by the latter’s theme park business, Universal Studios and Peacock.
Homonoff added that Skydance could have enough financial firepower for a deal in the event its $8 billion deal to acquire Paramount collapses or if it’s looking to continue to expand its business in the years ahead after that acquisition eventually closes.
But Lightshed Partners analyst Rich Greenfield was more skeptical about the prospects of a buyer emerging for studios and streaming in a recent blog post. In addition to citing an “incredibly low probability” that a big tech player could gain regulatory approval, he pointed out that Apple has already proven it can create HBO-quality programming without buying a major studio and that Amazon has been shifting its spend primarily towards sports after already acquiring MGM.
“Netflix is certainly not a buyer, especially as they would not want to put a regulatory target on their backs — nor is Google/YouTube or Microsoft,” he added.
As for legacy media, Greenfield said that regulatory approval would be challenging for Disney, which has already consolidated Fox’s studio assets and has been targeted by Trump and FCC Chairman Brendan Carr, and Comcast, whose CEO Brian Roberts has faced repeated attacks from Trump on Truth Social.
He added that Skydance would likely need a couple of years to transform Paramount’s asset mix and tech stack before pursuing bigger acquisitions, assuming the deal closes. Additionally, he said Sony could be a “wild card” if it pursued a deal with the help of a private equity firm such as Apollo, which previously partnered with it on a $26 billion joint offer for Paramount.
Given the unpredictability of the regulatory environment, Venkateshwar believes the most likely outcome in the near-term would be a strategic capital infusion from private equity firms as a bridge to a potential strategic exit sometime in the future. The streaming and studios business could also look to strike minority investment deals, joint ventures or content licensing partnerships to give it more financial flexibility, Homanoff said.
“While we sense WBD CEO and soon to be S&S CEO David Zaslav is frustrated with the stock’s underperformance, he has become a media mogul who is not ready to concede and sell,” Greenfield added. “In turn, S&S is likely to trade more on earnings and growth potential than takeover speculation.”
Global linear TV networks: ripe for consolidation?
Global Networks will include CNN, TNT Sports in the U.S., Discovery, top free-to-air channels across Europe, Discovery+ and Bleacher Report (B/R). It will retain a 20% stake in the studios and streaming business to help reduce its debt.
Executives said they will look to invest in international growth opportunities, elevate its live sports and news offering and grow the digital side of its brands, such as Discovery+ and CNN’s upcoming streaming offering.
While Homonoff acknowledged that TNT Sports could be of interest to Versant, citing CEO Mark Lazarus’ recent emphasis on sports, he believes a combination between the two companies would be unlikely, noting many of their networks overlap, such as CNN and MSNBC.
“You would doubt that from a regulatory perspective, they would want CNN to combine with MSNBC, or even MSNBC and CNBC,” he said.
Greenfield was more blunt, pointing out that cable network mergers have been “complete and utter failures” over the last decade. “Jamming more dying cable networks together is not a value creation strategy,” he said. “Whether or not GLN can find a merger party, we do not see that as a reason to get excited about a WBD split.”
As for CNN, the long-time cable executive said: “I can see [Skydance’s David] Ellison coming in and thinking, ‘You need something to enhance CBS News.’ I can see Saudi money or other money that involves a foreign buyer coming in and having a news service that extends around the world being a unique asset that they would like to control. And yes, there are private equity players who I’m sure would consider various ways to do it. All of them are probably scary prospects for people within CNN.”
If it doesn’t find a strategic buyer, Homonoff said the asset is ripe for rationalization and could shutter some underperforming networks to reallocate its investments and cut costs. WBD already plans to shutter four multiplex linear channels — HBO Family, ThrillerMax, MovieMax and OuterMax — in August, per a notice to Spectrum customers.
Bank of America analyst Jessica Reif Ehrlich also floated smaller asset sales of CNN or Poland’s TVN, but acknowledged it would be a multi-step process that has the potential to devalue the remaining assets that are left unsold. Alternatively, the global networks could go the private equity route, she said.
“[Private equity firms] understand how to manage that business with relatively low leverage. You put a relatively little amount of leverage on it and you manage it for cash flow and dividends,” S&P’s Sarma added. “These guys are all pursuing spinoffs, but maybe they will change their mind down the road.”
