Netflix (NFLX, Financial) frames Warner Bros. Discovery's (WBD, Financial) two-way split as a clear signal of a U.S. media “shakeout” driven by streaming's rise and linear TV's decline.
In an on-stage Bloomberg interview at the Founders Forum Global conference, co-CEO Greg Peters said everything in entertainment is “moving to streaming—everything is moving to on demand,” and that legacy players “have to rationalize their business for that reality.” Peters noted there's “inevitable logic” to further mergers among traditional networks as they adapt to subscriber-first models.
On Monday, WBD unveiled plans to carve itself into two standalone entities—one for streaming and another for linear networks—mirroring November's Comcast (CMCSA, Financial) decision to spin off NBCUniversal's TV channels into Versant, a separate public vehicle. Credit-rating firms Fitch, Moody's and S&P all slapped junk status on WBD this week following the split announcement, underscoring investor concern over rising debt and restructuring costs.
Netflix shares ticked up 1.35% in premarket trading, reflecting relief that the industry leader is doubling down on its direct-to-consumer franchise while rivals grapple with legacy burdens.
Investors should note that as traditional media companies shed fixed costs and realign toward on-demand services, subscriber growth and content ROI will come under fresh scrutiny.
With streaming's dominance crystalizing broader M&A and debt-restructuring trends, the next phase of industry reshaping hinges on Netflix's ability to sustain high-margin growth even as peers pursue consolidation.
