Now Streaming: Warner Bros. Discovery to again separate into two companies

“Now Streaming” is The Fly’s weekly recap of the stories surrounding the biggest content streamers.

PLAYING THIS WEEKEND: Highlighting this weekend’s new streaming content is season two of Netflix (NFLX) action comedy series “FUBAR,” which stars Arnold Schwarzenegger and Monica Barbaro. Also available to stream this weekend is “Deep Cover,” a British action comedy film starring Orlando Bloom and Bryce Dallas Howard. The film can be viewed through Amazon Prime Video (AMZN).

WARNER BROS. DISCOVERY SEPARATION: On Monday, Warner Bros. Discovery (WBD) announced plans to separate the company, in a tax-free transaction, into two publicly traded companies. The Streaming & Studios company will consist of Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max, as well as their film and television libraries. Global Networks will include entertainment, sports and news television brands around the world including CNN, TNT Sports in the U.S., and Discovery, top free-to-air channels across Europe, and digital products such as the profitable Discovery+ streaming service and Bleacher Report. David Zaslav, President and CEO of Warner Bros. Discovery, will serve as President and CEO of Streaming & Studios. Gunnar Wiedenfels, CFO of Warner Bros. Discovery, will serve as President and CEO of Global Networks. Both will continue in their present roles at WBD until the separation. The separation is expected to be completed by mid-2026, subject to closing and other conditions, including final approval by the Warner Bros. Discovery Board, receipt of tax opinions and/or a private letter ruling from the Internal Revenue Service with respect to the tax-free nature of the transaction for U.S. federal income tax purposes, and market conditions.

Following the announcement, Barclays noted that the move has been expected by investors since it announced a restructuring of the company into two divisions last year. The company has $37B of gross debt and another $5B of off balance sheet debt and neither standalone entity will have enough EBITDA to absorb this on a standalone basis without a significant increase in leverage, the analyst tells investors in a research note. Barclays believes realizing valuation upside will depend more on a future recapitalization path rather than the announcement this morning. It maintained an Equal Weight rating on Warner Bros. Discovery with a $9 price target.

NETFLIX/MEXICAN PRODUCTION: After unveiling plans in February to spend $1B on Mexican production over the next four years, Netflix co-CEO Ted Sarandos has made a similar commitment to Spanish originals, saying at Netflix’s Tres Cantos Madrid hub that the company will invest $1.1B in the country by 2029, Deadline’s Jake Kanter reported. Sarandos said that Spanish titles have generated over 5B hours of viewing on Netflix after the streamer has partnered with local storytellers over the past decade.

JPMORGAN ON NETFLIX: Meanwhile, JPMorgan said in a research note this week that since the firm’s Netflix downgrade to Neutral on May 19, it has heard three consistent areas of pushback: the company’s back half of 2025 content may be the strongest six-month period ever, advertising remains early and is poised for better monetization, and estimates will move higher on content strength, pricing power, and advertising. JPMorgan projects double-digit revenue growth through 2026, ongoing margin expansion, free cash flow ramp, and greater share buybacks. However, it continues to believe Netflix shares are “well owned and the risk/reward is less compelling.” The firm reiterated a Neutral rating on the shares with a $1,220 price target.

AMAZON MGM SLATE: Amazon MGM Studios will have a $1B slate in 2026 and release 20 movies, with 10 of those movies having theatrical runs and will not be exclusive to Prime Video thereafter, Deadline’s Stewart Clarke reported. “Coming up in 2026 we will be releasing 20 movies, 10 of which will be theatrical and the budget for that whole slate in 2026 will be one billion dollars – and we’ll be committing a P&A spend of one billion to that,” said George Wilkinson, International TV Distribution Manager, Amazon MGM Studios Distribution, at the ongoing NEM market and conference in Dubrovnik. “What does that mean? It means we are heavily invested in theatrical,” Wilkinson said, adding that “It also means that all of our partners in this room, we will be distributing that content to them. We’re not holding any content back from the market from that slate.”

DISNEY/NBCUNIVERSAL: According to a regulatory filing this week, Disney (DIS) said it will pay Comcast’s (CMCSA) NBCUniversal an additional $438.7M for its stake in Hulu. “The final equity fair value, which was completed on June 9, 2025, takes into account the valuation of a third appraiser, which if it had been equal to or below the guaranteed floor value would have resulted in no additional amount payable to NBCU and if it had been consistent with the NBCU’s appraiser’s valuation would have resulted in an additional amount of approximately $5B payable to NBCU as its share of the difference between the equity fair value and the guaranteed floor value,” Disney said in the filing. “Pursuant to the contractual appraisal process that was completed on June 9, 2025, an additional $438.7M is payable by Disney to NBCU to purchase NBCU’s interest in Hulu.”

PARAMOUNT: Earlier this week, Paramount (PARA) announced that Naveen Chopra, Executive Vice President and CFO, is departing to pursue other opportunities. Andrew Warren, currently Strategic Advisor to the Office of the CEO and former CFO of Discovery Communications, will assume the additional role of Executive Vice President, Interim CFO.

Meanwhile, CNBC’s Lillian Rizzo reported that Paramount is cutting its U.S.-based staff by 3.5% and notified its staff of the latest round of layoffs on Tuesday morning in a memo from the office of the CEO. In August, Paramount began the process of reducing its U.S.-based workforce by 15% and Tuesday’s memo said that the process may also result in some impacts to the workforce outside of the U.S. over time, CNBC noted.

STOCK PLAYS: Other publicly traded companies in the space include Apple (AAPL), AMC Networks (AMCX), Roku (ROKU), Fubo (FUBO), and Fox Corporation (FOX).