Will WBD's Strategic Separation Lay Groundwork for Future Growth?

Warner Bros. Discovery’s WBD upcoming split into Warner Bros. (Streaming & Studios) and Discovery Global Media (Linear Networks) marks a pivotal step toward simplifying operations and sharpening strategic focus. The move separates fast-scaling creative assets from steady, cash-rich networks, allowing each business to grow on its own terms and giving investors a clearer view of where long-term value can emerge.

The new Warner Bros. will unite HBO, Max, DC Studios, Warner Bros. Pictures and Television into a single creative and distribution engine. With a deep pipeline that includes Supergirl: Woman of Tomorrow, The Batman II, the Harry Potter series for Max, The Lord of the Rings: The Hunt for Gollum, Wonder Woman, Clayface and returning franchises such as The White Lotus and The Last of Us, the studio is positioning itself to drive multi-platform engagement and long-tail monetisation. According to WBD, studios and streaming are expected to generate more than $3.8 billion in combined Adjusted EBITDA during 2025, supported by a stronger release pipeline and expanding digital reach.

Discovery Global Media, which houses CNN, TNT Sports, Discovery Channel, HGTV and Bleacher Report, remains a dependable profit centre anchored in live news, sports and lifestyle programming. The Zacks Consensus Estimate for 2025 network revenues is pegged at $17.57 billion, while WBD’s outlook projects EBITDA above $4 billion annually. A refreshed content slate spanning 90 Day Fiancé, Fixer Upper: The Lake House, CNN Originals and TNT Sports Live underpins the segment’s long-term relevance and profitability.

WBD has incurred over $250 million in separation-related costs, signalling its commitment to creating leaner, independently run organisations. The Zacks Consensus Estimate for total 2025 revenues is pegged at $41.82 billion, up 4.3% year over year, signalling steady progress as both entities move toward operating independently by 2026. As the separation nears completion in 2026, WBD’s dual-entity model is poised to deliver stronger execution, clearer capital allocation and more durable shareholder returns across the evolving media landscape.

WBD Faces Stiff Competition

Warner Bros. Discovery faces intense competition from Walt Disney DIS and Netflix NFLX, both dominant forces in global entertainment. Like Walt Disney, WBD is leaning on premium IP and franchise expansion to strengthen its streaming base, while Netflix continues to scale subscriber growth through aggressive international content investment. In studios and streaming, Walt Disney’s diversified ecosystem and Netflix’s global platform remain key benchmarks for scale and profitability. However, WBD’s dual focus on high-value franchises and disciplined cost control provides differentiation. As the split progresses, Disney, Netflix and WBD will define the next stage of global content leadership across film, streaming, and linear distribution.

WBD’s Share Price Performance, Valuation & Estimates

WBD shares have jumped 73.4% in the year-to-date period, outperforming both the Zacks Consumer Discretionary sector’s rise of 5.9% and the Zacks Broadcast Radio and Television industry’s growth of 29.5%.

WBD’s YTD Price Performance

From a valuation standpoint, WBD stock is currently trading at a forward 12-month price/sales ratio of 1.2X compared with the industry’s 4.86X. WBD has a Value Score of B.

WBD’s Valuation

The Zacks Consensus Estimate for WBD’s 2025 EPS is pegged at 36 cents per share, which has improved by 3 cents over the past 30 days. This indicates a significant improvement from the year-ago loss of $4.62 per share.

Warner Bros. Discovery, Inc. Price and Consensus

Warner Bros. Discovery, Inc. price-consensus-chart | Warner Bros. Discovery, Inc. Quote

WBD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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