Warner Bros. Discovery stock jumped on Monday after the HBO and CNN owner announced plans to split into two separate companies.
The Streaming & Studios company will include Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as their legendary film and television libraries.
The second business, Global Networks, will include entertainment, sports and news television brands including CNN, TNT Sports in the US, Discovery and the Discovery+ streaming service and some free-to-air channels in Europe.
WBD stock jumped almost 13% as the market opened to just above $11 before dipping slightly.
CEO David Zaslav will lead Streaming & Studios, while CFO Gunnar Wiedenfels will run the Global Networks business. Both will continue in their present roles until the separation takes effect next year.
"We see this transaction as a natural progression for WBD," Wiedenfels said on a call announcing the spinoff. "The whole concept of this separation here has been to create two very strong and well positioned companies, in and of themselves."
Zaslav was the architect of the combined WBD, which only began trading in April 2022.
Last week investors resoundingly rejected the CEO's proposed pay package, which would have given him a 4% raise. WBD's revenue has declined 10% in the past year, and its debt rating was recently downgraded.
Zaslav said in a statement on Monday that operating as two distinct companies would give WBD's brands the "sharper focus and strategic flexibility they need to compete most effectively in today's evolving media landscape."
Wiedenfels said Global Networks would work with distribution partners to "create value for both linear and streaming viewers globally while maximizing our network assets and driving free cash flow."
Bank of America analysts wrote in a note last week they maintained a "Buy" rating with a $14 target price: "We continue to believe WBD has a compelling collection of assets."
The split plan comes after Comcast said late last year it planned to spin off some NBCUniversal channels, including MSNBC, CNBC, USA, Oxygen, E!, Syfy, and the Golf Channel.
NBC, Bravo, and the streaming service Peacock will remain under NBCUniversal, Comcast president Mike Cavanagh told NBCU employees in a memo viewed by Business Insider.
The "SpinCo" plan would take about a year and permit growth in NBCUniversal's remaining assets, he wrote.
