Warner Bros. Discovery's Strategic Split and Streaming Growth: A Catalyst for Undervalued Opportunity?

The media and entertainment landscape is undergoing a seismic shift, and Warner Bros. Discovery (WBD) stands at the epicenter of a transformative moment. With its announced plan to split into two distinct entities by 2026-streaming and studios under one umbrella, and TV networks under another-the company is positioning itself to capitalize on the accelerating shift to digital while shedding underperforming legacy assets. For investors, this structural overhaul, combined with HBO Max's global expansion and a bidding war for WBD's crown jewels, presents a compelling case for near-term action and long-term alpha potential.

Structural Transformation: A Strategic Reboot

WBD's decision to split its operations reflects a stark acknowledgment of the industry's new reality. The company's streaming and studios division grew by 8% in Q3 2025, driven by a 24% surge in studio revenue, while global TV network revenue plummeted by 22% year-over-year, according to a Finimize report. This divergence underscores the urgency of the split, which aims to streamline operations and unlock value by focusing on high-growth areas.

The split is expected to create two publicly traded entities: "Warner Bros." (streaming, studios, and premium content) and "Discovery Global" (TV networks, sports, and Discovery+). This bifurcation mirrors the strategies of peers like Disney and Paramount, which have similarly decoupled streaming from traditional media to better navigate the digital transition, as reported by MarketBeat. With a self-imposed deadline of December 2025 to finalize its decision, WBD is racing against time to execute a move that could redefine its valuation.

HBO Max: A Streaming Engine with Room to Roar

At the heart of WBD's streaming ambitions is HBO Max, which boasts 128 million global subscribers as of Q3 2025, according to a TheWrap report. While this figure lags behind Netflix's 195 million paid subscribers, HBO Max's premium content library-including HBO Originals and DC Comics-positions it as a critical asset in the streaming wars. The platform's recent price hikes-raising the Basic with Ads plan to $10.99, Standard to $18.49, and Premium to $22.99-alongside a crackdown on password sharing, are expected to drive revenue acceleration in H1 2026, as Reuters reported in an article.

Moreover, HBO Max's expansion into key European markets like the U.K. and Ireland could further boost its global footprint. However, the loss of NBA rights in Q4 2025-a major revenue driver-introduces near-term uncertainty. Despite this, the streaming division's 8% growth in Q3 2025, compared to the declining linear TV business, highlights its resilience and potential to become a standalone growth engine, according to the Finimize report.

Buyer Interest: A Bidding War for WBD's Crown Jewels

The impending split has ignited a frenzy among potential bidders, with Comcast and Netflix emerging as the most prominent contenders. Comcast, which has retained Goldman Sachs and Morgan Stanley to evaluate a bid, is eyeing WBD's streaming and studio assets to bolster Peacock and Universal Parks, as reported by Variety in a report. Its leadership has emphasized a "high bar" for M&A but acknowledged that the spinoff of its cable networks into Versant could open the door to strategic acquisitions, as Deadline reported in an article.

Netflix, meanwhile, is reportedly leveraging Moelis & Co. to assess a potential acquisition of WBD's digital assets, with a focus on intellectual properties like Harry Potter, DC Comics, and HBO Originals, as TechJuice reported in an article. Both companies have explicitly ruled out interest in WBD's legacy TV networks, signaling a preference for high-margin, content-driven businesses. This buyer interest introduces volatility but also raises the stakes for WBD's shareholders, as a premium bid could significantly enhance value.

Investment Thesis: Volatility as an Opportunity

For investors, the key lies in balancing the near-term volatility of WBD's transformation with its long-term potential. The company's Q2 2025 earnings beat estimates, with $0.63 per share versus a consensus of ($0.16), and a 1% year-over-year revenue increase to $9.81 billion, according to MarketBeat, suggest underlying strength. Analysts have assigned a range of ratings, from "Strong Buy" to "Hold," with a consensus price target of $14.07, as MarketBeat reported.

The split and potential sale of assets create a dual catalyst: a near-term re-rating as the company's structure becomes clearer, and a long-term payoff if HBO Max's growth accelerates or a strategic buyer pays a premium. However, risks remain, including the NBA rights loss and the challenge of monetizing streaming in a crowded market.

Conclusion: Positioning for the Reboot

Warner Bros. Discovery's strategic split is not just a corporate restructuring-it's a repositioning for the digital age. By isolating its high-growth streaming and studio operations, WBD is creating a clearer path to value creation. For investors willing to navigate the near-term noise, the combination of structural transformation, streaming tailwinds, and competitive buyer interest offers a compelling entry point. As the clock ticks toward December 2025, the market's patience may be rewarded with a renaissance in WBD's valuation.