Splitting the Difference: Why Warner Bros. and Comcast Are Carving Up Their Empires

Warner Bros. Discovery and Comcast are in the process of dismantling their once-reliable cable businesses, a move that is separating their linear TV networks from streaming and studio divisions. This gamble signals the beginning of the end for linear TV’s long golden era.

While framed as strategic, both moves highlight the irreversible collapse of linear television as advertisers and viewers migrate to digital platforms at accelerating speeds. The fallout is clear: Warner Bros. and Comcast are playing a short-term game of survival, where mergers or sell-offs are inevitable outcomes.

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Sum of the Parts: Warner Bros. Discovery and Comcast “Reorganize”

The recent declaration by Warner Bros. Discovery (WBD) to bifurcate its once mighty linear assets mirrors Comcast’s November announcement of its NBCUniversal cable network spinoff. WBD will separate its Global Linear Networks from its Streaming & Studios division by mid-2025.

On the surface, the moves are positioned as efforts to “maximize optionality,” as the WBD CEO explained. The cable-heavy division will focus on cash flow and debt reduction, while streaming and studios, powered by platforms like Max and Discovery+, will chase global growth. However, beneath this tidy narrative lies a harsh truth: the legacy pay-TV business is in freefall, and these corporate splits are last-ditch attempts to salvage value before the inevitable crash.

With linear TV ad revenues projected to drop below $20 billion by 2026 and streaming profitability still elusive, these corporate gambits are merely delaying an unrelenting hard landing. Once built on the bedrock of cable, legacy media companies are left dismantling their empires piece by piece in a race to remain relevant in a streaming-dominated future, where the rules of engagement and revenue generation are vastly different from the traditional linear TV model.

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U.S. Basic Cable Networks Ad Revenue

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Warner Bros.'s $9 Billion Reality Check

The rapid erosion of linear television has been quantifiable—and grim. In Q2 2024, WBD took a $9.1 billion impairment charge on its TV networks, acknowledging that its cable channels' value has cratered since its 2022 merger with Discovery. Notably, even once cash-printing juggernauts like CNN, TNT, and HGTV have seen audiences and ad revenue shrink to historic lows.

Comcast, too, is feeling the pain. U.S. cable ad revenues are expected to decline 4% in 2024 and another 3% in 2025, falling below $20 billion by 2026—a level not seen since 2007. With fewer viewers and fragmented audiences, the ad dollars that once propped up linear networks are bleeding into streaming platforms like Prime Video and Peacock, where advertisers can chase younger, digital-first audiences. These are not easy times for the industry.

Comcast's restructuring sees its cable networks—with the notable exception of Bravo—moved into a standalone entity, dubbed SpinCo. While WBD has stopped short of a complete spinoff, the restructuring primes WBD's assets for a merger with Comcast's SpinCo. Should this come to pass, it would combine two sinking ships into a single, leaking vessel.

Even Bravo, Comcast's lone holdout, faces challenges: subscriber numbers are expected to drop 5% next year. This decline in viewership and the broader shift towards streaming pose a significant threat to Bravo's ad revenue and overall viability. Comcast's broader NBCU machinery—once able to bundle cable networks alongside marquee events like the Olympics and Sunday Night Football—is no longer enough to prevent the linear business' decay.

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The Pay-TV Business Has No Buyers

If splitting cable and streaming businesses was meant to attract suitors, media executives may be in for a rude awakening. Selling off cable assets will be no easy task. WBD, burdened with over $40 billion in debt, relies on its declining cable channels for cash flow to service its obligations. Meanwhile, Comcast's SpinCo—described by some as a "hollowed-out husk" of networks—will struggle to find partners willing to acquire shrinking assets.

Media companies face a dual dilemma:

1. The Ad Exodus: Advertising on standalone cable networks becomes less viable without the leverage of a bundled streaming service like Max.
2. Content Migration: Linear networks are hemorrhaging not only viewers but also talent as creators follow audiences to platforms like Netflix, where budgets remain robust.

Isolated cable networks will find it impossible to command favorable ad deals. Without NBCU's broadcast tentpoles, Comcast's cable networks lack bargaining power. WBD faces a similar fate as its streaming platform, Max, depends heavily on content pipelines from networks like HGTV and TBS. This dependency could unravel once the businesses are formally split.

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Streaming's Growth Masks Stark Revenue Declines

Despite their structural fractures, both WBD and Comcast trumpet streaming as a growth story. WBD added 7.2 million global subscribers in Q3—its best performance since launching Max in 2023. However, a closer look reveals a sobering trend: only 200,000 of those additions came from the U.S. and Canada. The lion's share of growth occurred in international markets, where profit margins are slimmer, and subscriber churn remains a constant risk.

Streaming may offer brighter prospects than cable, but it is far from a panacea. Platforms are burning through capital to attract users and advertisers, with little to show in the way of sustainable profitability. For instance, the cost of advertising on streaming services has fallen sharply in recent months. Average CPM (cost per thousand impressions) across major ad-supported streamers has declined from $35 to $31 over the past year, with projections dropping below $29 by Q2 2025.

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U.S. AVOD Platform Average CPM

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At the same time, Prime Video and Netflix are expanding their ad tiers, leaving companies like WBD and Comcast scrambling to compete. Netflix now boasts 70 million users on its ad-supported plan, a threefold increase since early 2024, while Disney's AVOD plans have become the default option for 60% of new U.S. subscribers. Streaming's growth, while impressive, comes at the expense of cable—and WBD and Comcast appear ill-prepared to keep up.

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FilmTake Away: A Race to the Bottom Line

The decision by WBD and Comcast to separate their linear and streaming assets is less about innovation and more about survival. These moves, packaged with buzzwords like "flexibility" and "value creation," are attempts to distract from a harsher reality: legacy media companies are carving up their businesses to prepare for mergers or sales that will ultimately diminish their long-term value.

Comcast's SpinCo and WBD's restructured divisions resemble a game of corporate hot potato, where declining cable assets are tossed between entities in hopes of offloading the burden. But the market—and advertisers—aren't fooled. Cable television is no longer the steady profit machine it once was, and separating these businesses won't reverse their trajectory.

While streaming platforms like Max and Peacock offer glimmers of hope, their growth cannot mask the foundational collapse of linear television. The writing is on the wall: the big media conglomerates that built their empires on cable are now dismantling them, piece by piece. Further consolidation is inevitable.

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