Warner Bros. Discovery Is Splitting Up: What It Means for You

For those who've just gotten used to the idea of HBO Max, Warner Bros. movies and Discovery Channel all existing under the same brand, we have some bad news: They're splitting up again.

Warner Bros. Discovery, which also owns CNN, Food Network, DC Studios and Warner Bros. Gaming, is splitting up into two separate public companies. According to a Monday press release, the two new companies will be called Streaming & Studios and Global Networks. Those are the real names -- it's hard to imagine their generic nature won't create some confusion among streaming customers, though you wouldn't rule out yet more rebranding in the future.

Streaming & Studios will include the newly renamed HBO Max, Warner Bros. movies and gaming, and DC among other properties. Global Networks will hold among its assets Discovery Plus, CNN, Bleacher Report and TNT Sports.

The companies just completed their merger in 2022. The new split is expected to be completed in 2026. It's unclear yet whether the split will cut consumers off from content on services they already subscribe to, such as HBO Max, which includes content that would fall under Global Networks, and whether the pricing of services will change to factor that in. 

For now, the services are not expected to experience any major shakeups. The press releases about the two new companies focused on shareholder value and aggressive pursuits of new ventures, not on how the change will affect viewers and customers.

A 'House of Brands' architecture

When the Warner Bros. Discovery merger happened in 2022, streaming companies such as Netflix, Amazon and Netflix spent billions in an arms race for new content. Brands including Hulu, Disney and Paramount merged their streaming services, bringing franchises and channels together to compete.

But that spending has cooled and with Warner Bros. Discovery's move, it may be a signal that media companies want to differentiate their properties again instead of bundling them together.

In the announcement, Warner Bros. Discovery said it wants to unlock shareholder value.

"That to me says 'We're gonna get more capital, we're gonna invest in these franchises,'" says Chuck Byers, teaching professor of marketing at the Leavey School of Business at Santa Clara University. "(In 2022), it was really jump in or be left behind. Now what you're seeing is somewhat of a more strategic approach to the health of franchises and delivered value."

It might be good news if you care about DC, Harry Potter and HBO's slate of shows. 

"Hopefully, you'll see more quality entertainment in terms of overall programming of the networks," Byers says, "They'll have more chances to fund individual channels."

The strategy being employed is called house of brand architecture, Byers says, not unlike what Procter & Gamble does with its many household brands. 

"What people really buy are the brands, what they watch are the brands," Byers says."They watch HBO. They watch Discovery. It really doesn't matter to them who owns the brands. The advantage of house of brands is you can invest in and evaluate on individual brands."

As to the generic nature of the names of the new companies -- Streaming & Studios and Global Networks -- Byers believes these are just placeholder names.

"I sense what's going to happen is before they go public, they're going to come up with something more descriptive," he says. "They were required by SEC rules to make their statement and probably took a look at what (stock) symbols were available."