WBD is considering splitting its company to separate its digital streaming and legacy cable businesses.
The Max streaming service added 5.3 million subscribers in Q1 2025, boosting revenue by nearly 10% to $2.66 billion.
Linear TV network revenues fell 7% year-over-year, contributing to a 10% overall revenue decline for WBD.
Warner Bros. Discovery is navigating financial pressure, weighed down by $38 billion in gross debt and the persistent erosion of its traditional linear television business. But amidst these challenges, its Max streaming service has become a potent growth driver, fueled by a surge in subscribers and a booming advertising business from its ad-supported tiers. The core business model divergence is now reportedly steering WBD towards a company split, possibly separating its digital future from its legacy cable past.
Division on deck: Reports surfaced this month, notably from CNBC, indicating WBD is preparing to divide the company, a move that could see its linear cable networks spun off from its streaming and studio operations. The potential restructuring follows WBD’s Q1 2025 earnings report, which, for the first time, detailed financials for each business segment separately—a common precursor to such corporate maneuvers. The company had already laid groundwork in December 2024 by internally separating these divisions.
Streaming surge: Max delivered strong Q1 2025 results, adding 5.3 million global subscribers to reach 122 million, while streaming segment revenue climbed 9% year-over-year to $2.66 billion. Advertising revenue within streaming jumped an impressive 35%, a gain WBD attributed to an “increase in ad-lite subscribers” being a “primary engine” for the growth. This performance pushed streaming adjusted EBITDA to $339 million, a substantial improvement from the prior year.
Legacy lag: In contrast, WBD’s traditional segments faced headwinds, with linear TV network revenues falling 7% year-over-year to $4.8 billion in Q1. The studios division also saw an 18% revenue drop to $2.3 billion, contributing to an overall company revenue decline of 10% to $8.98 billion and a net loss of $453 million for the quarter.
Strategic shift: CEO David Zaslav emphasized a content strategy for Max focused on quality, saying, “The idea is it’s not how much, it’s how good is something we’ve identified.” He also noted that the recent corporate reorganization “gives us full optionality… we can move quickly if we decide to change and make a determination on restructuring.” This potential split is seen by analysts as a way to allow the market to more accurately value WBD’s high-growth streaming and studio assets independently of the declining linear business.
Ad demand up: The enthusiasm for Max’s ad-supported offerings appears robust, with JB Perrette, WBD’s CEO and President of Global Streaming and Games, noting “great demand” for ads in many key markets, “up multiples of what they were even 12 months ago.” This growing advertising income stream is a bright spot as the company considers its future structure.
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