CNBC reported on Thursday that Warner Bros Discovery might be considering a breakup. The focus seems to be shifting from its struggling cable television sector to the more rapidly expanding streaming and studio markets.
In reaction to this news, the company’s stock surged by over 4%, bouncing back from a nearly 6% dip attributed to a disappointing quarterly report.
Earlier in the day, Warner Bros Discovery announced it had missed its first-quarter revenue targets, leading to a larger-than-expected loss, which was largely a result of weak box office performance and a persistent decline in cable subscriptions.
Reports indicate the company did not immediately respond to inquiries from Reuters regarding the CNBC story, which relied on unnamed sources.
In December, Warner Bros Discovery hinted at a potential decline in cable television revenues or a spinoff, emphasizing its streaming offerings and studio operations.
This week marked the first time results were reported under this new structure.
A breakup could align Warner Bros Discovery more closely with Comcast, leveraging elements from the fading NBCUniversal Cable TV network, including channels like MSNBC and CNBC, while also embracing growth in the streaming landscape.
Analysts have speculated about the possibility of Warner Bros Discovery’s breakup, especially as it encompasses valuable assets like CNN, HBO, and the renowned Warner Bros. Studios.
Last year, Bank of America analyst Jessica Leaf Erich suggested that Warner Bros Discovery’s cable assets could be a logical fit for Comcast’s new spinoff.
The company faces a significant challenge seen across the media landscape, losing thousands of cable television subscribers annually, which pressures it to produce hit content and enhance the profitability of its streaming operations.
To complicate matters, the potential for U.S. tariffs on foreign-produced films is adding to the industry’s difficulties, particularly since the biggest-budget films are often made overseas.
The Weakness of the Studio
During the January-March quarter, Warner Bros Discovery struggled to match the success of last year’s “Dune: Part 2.”
The standout release at that time, Bong Joon Ho’s sci-fi dark comedy “Mickey 17,” earned modest returns at the box office.
As a result, studio revenues fell by 18%, totaling $23.1 billion, and missed estimates by roughly $2.733 billion, according to Visible Alpha.
On a brighter note, the company has had a solid start to the second quarter, with Ryan Coogler’s horror film “Sinners” and the blockbuster Minecraft Movie generating approximately $900 million globally, marking it as the biggest release of 2025 so far.
The summer lineup looks promising as well, including the upcoming “Superman” directed by James Gunn, set for release in July.
Revenue from the TV network sector, which includes CNN, Discovery Channel, and Animal Planet, decreased by 7% during the quarter.
Overall, revenues dropped by 10%, hitting $8.98 billion, while analysts had estimated around $960 billion, according to data from LSEG.
The company reported a loss of 18 cents per share, which was greater than the anticipated 13 cents.
Yet, the streaming sector emerged as a bright spot. Warner Bros Discovery added 5.3 million streaming subscribers in the quarter, although analysts anticipated a total of 122.3 million subscribers.
Powerful content continued to roll out, including HBO’s third season of “The White Lotus” and the medical drama “The Pitt,” contributing to the overall picture.
