The Zhitong Finance App learned that on Thursday, Warner Bros. Discovery Channel (WBD.US) said it would restructure its assets into two key divisions, one focusing on traditional cable TV business and the other focusing on streaming media and studios. Prior to that, rival Comcast (CMCSA.US) also announced a complete spin-off, which seems to indicate that something big is about to happen in the media industry, and David Zaslav, CEO of Warner Bros. Discovery Channel, may rejoin a media merger and acquisition war.

Warner Bros. Discovery Channel said it will merge its current MAX and Discovery+ streaming services and HBO divisions with another division including Warner Bros.'s film and television production business. A corporate restructuring is usually a trivial matter. However, Warner Bros. Discovery Channel's stock price closed up more than 15% after the announcement on Thursday. What's even more strange is that three major banks, J.P. Morgan Chase, Evercore, and Guggenheim Securities, are advising on this tedious accounting change.

Coupled with the hints Zaslav has been releasing, this could mean that the media landscape is about to be reordered. In July of this year, it was reported that he was weighing various strategic options. He had considered bidding for Paramount Global (PARA.US). In November, after Trump won the US presidential election, he pointed out that an administration conducive to reaching an agreement provided an opportunity for integration.

The media industry is expected to take advantage of this opportunity. Currently, traditional television is in a painful predicament. According to Visible Alpha, the EBITDA of Warner Bros. Discovery Channel's traditional cable business will drop 37% by 2026 compared to five years ago.

Comcast President Brian Roberts realized this early on, announcing in November that he would be divesting most of the company's cable channels. Warner Bros. Discovery didn't act very well at the time, but Thursday's move seemed like a prelude.

After all, there are tempting values waiting to be unlocked right now. Warner Bros. Discovery Channel's cable business is likely to be worth 5 times its expected EBITDA of more than $7 billion in 2025, and is valued lower than Fox (FOXA.US) without major sporting events. The expected profit of the company's streaming business of 1 billion dollars is estimated at 20 times (considering that profitability is lower than that of Netflix (NFLX.US)). Finally, if the proposed sale of Paramount Pictures is used as a measure, and Morgan Stanley analysts set it at around 18 times EBITDA, then the value of the company's studio would reach 35 billion dollars. Adding these up, and subtracting 10 billion dollars of unnecessary costs from the company's costs, the enterprise value would be close to 90 billion dollars, 20 billion dollars more than the current value of Warner Bros. Discovery Channel.

The spin-off could free the growing sector from $37 billion in debt, thereby making investors aware of this value. Although creditors may be unhappy about transferring these debts to a separate television business, the deal may help strengthen the sector. Warner Bros. Discovery Channel itself is the product of a spin-off with Warner Media, which spun off from AT&T (T.US) in 2022. Maybe Comcast — or the cable TV business of rivals like Paramount or Walt Disney (DIS.US) — could be the target of the deal this time. At any rate, it seems that Warner Bros. Discovery Channel is once again at a crossroads.