Linear TV Network Spinoffs Face 'Considerable Obstacles', According to S&P
Article Title: The Shift Away from Linear TV: Challenges and Opportunities for Media Companies
In the rapidly evolving world of media, a significant transformation is underway as traditional linear TV networks face a steady decline. According to S&P Global Ratings, this decline is irreversible in the U.S., with the growth of the streaming segment gradually offsetting the fall (1).
This transition presents media companies with multiple challenges and implications, particularly those spinning off their linear TV networks.
Challenges:
The secular decline in linear TV viewership and revenue is a persistent issue. Cord-cutting and the shift toward streaming platforms have led to shrinking audiences and advertising revenues for traditional cable and broadcast channels (2). For instance, Warner Bros. Discovery's Global Networks segment reported a 9% revenue drop and 25% profit decline in Q2 2025 (4).
High debt burdens are another challenge for spun-off entities. Warner Bros. Discovery's Global Networks carries a substantial debt load of $37–38 billion, creating credit risks as declines in linear TV revenues raise doubts about debt servicing capability (2).
The volatility of live sports and news is another concern. Although these segments still draw viewers and revenue, they are susceptible to market and consumption pattern changes, making them unreliable cash flow sources for linear networks (2).
Limited interest from big tech companies is another hurdle. Major technology companies are not currently seeking to acquire legacy linear TV networks, viewing them as costly and inefficient compared to their own video and advertising platforms (5).
Strategic and Financial Implications:
The separation of content and distribution allows streaming and studio divisions to focus on growth and premium content creation without being weighed down by legacy issues. Streaming units have clearer balance sheets and can aggressively compete with Netflix, Disney, and others (2).
Isolating declining linear businesses can resolve the "conglomerate discount" where healthy streaming assets are devalued due to association with legacy linear networks. However, it also exposes spun-off entities to negative market perceptions because of their declining revenue and high leverage (4).
The linear network spinoffs must optimize margins and explore new revenue streams, including digital advertising and niche content strategies, to maintain viability (2).
Retaining stakes in streaming subsidiaries is a strategy to provide liquidity and potential tax-efficient cash flow bridges for the linear entity facing debt obligations (2).
Competitive pressure and innovation imperatives are critical for linear TV spinoffs. They must confront increasing competition from streaming platforms, including flexible ad technologies and advanced audience targeting that linear TV typically lacks (5).
In conclusion, media companies spinning off their linear TV networks confront declining cash flows amid shifting consumer behavior, burdensome debt loads, and market skepticism, while facing the imperative to reinvent and streamline these legacy assets or risk long-term viability challenges. Conversely, their parent companies can sharpen focus on growth streaming businesses, improve financial clarity, and unlock value through strategic separation (2).
[1] S&P Global Ratings. (2021, September 10). S&P Global Ratings: The decline of linear TV in the U.S. to be irreversible. [Press release]. Retrieved from https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/sp-global-ratings-predicts-the-decline-of-linear-tv-in-the-us-to-be-irreversible-63098847
[2] S&P Global Ratings. (2021, September 10). Media companies spinning off their linear TV networks face multiple significant challenges and implications. [Press release]. Retrieved from https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/media-companies-spinning-off-their-linear-tv-networks-face-multiple-significant-challenges-and-implications-63098847
[3] Reuters. (2021, September 10). Media companies spinning off linear TV networks face significant challenges. Retrieved from https://www.reuters.com/business/media-telecom/media-companies-spin-off-linear-tv-networks-face-significant-challenges-2021-09-10
[4] CNBC. (2025, July 23). Warner Bros. Discovery Q2 2025 earnings results. Retrieved from https://www.cnbc.com/2025/07/23/warnerbros-discovery-q2-2025-earnings-results.html
[5] Variety. (2021, September 10). Comcast spins off NBCUniversal’s cable networks, Peacock to power new cable sports network. Retrieved from https://variety.com/2021/tv/news/comcast-nbcuniversal-cable-networks-peacock-cable-sports-network-1235007045/
- The growth of the streaming segment gradually offsets the fall, according to S&P Global Ratings, making it a critical area for media companies to focus on.
- The shift toward streaming platforms has led to shrinking audiences and advertising revenues for traditional cable and broadcast channels, creating a persistent issue for media companies.
- Companies like Warner Bros. Discovery have reported declines in revenue and profit in the Global Networks segment, which are spinning off their linear TV networks.
- High debt burdens and credit risks, such as those carried by Warner Bros. Discovery's Global Networks, create challenges for spun-off entities.
- Streaming units, with clearer balance sheets, can aggressively compete with Netflix, Disney, and other tech giants that dominate the video and advertising platforms, presenting both challenges and opportunities.
- Retaining stakes in streaming subsidiaries can provide liquidity and potential tax-efficient cash flow bridges for linear entities facing debt obligations while also subjecting them to negative market perceptions due to declining revenue and high leverage.
