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Warner Bros. Discovery (WBD +8%) is trading nicely higher today as investors cheer the struggling media company's decision to separate the company into two publicly traded companies.

• On the one hand will be its Streaming & Studios company, which 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. David Zaslav, currently CEO of Warner Bros. Discovery, will serve as CEO of Streaming & Studios.
• On the other hand will be Global Networks, which will include CNN, TNT Sports in the US, and Discovery, top free-to-air channels across Europe, and digital products such as the Discovery+ streaming service and Bleacher Report (B/R). Gunnar Wiedenfels, CFO of Warner Bros. Discovery, will serve as CEO of Global Networks.
• WBD believes that, by operating as two distinct companies, each will be able to focus on their individual goals and strategies. This will also allow each company to pursue important investment opportunities. WBD feels a separation will allow each company to act faster and be more aggressive in terms of pursuing opportunities. Also, the separation will allow investors to assign different multiples to each company.

This a trend we are seeing in legacy media as it deals with increasing competition from streaming and as consumers move away from traditional cable/linear tv. This WBD separation is very similar to what Comcast (CMCSA) is doing in terms of spinning out its cable networks, to be called Versant, from NBCUniversal by year end. Also, Lions Gate Entertainment (LGF.A) recently completed the separation of its Studio and STARZ businesses into two publicly-traded companies.

Investors are clearly pleased to see this separation even though it was pretty much expected. One of the benefits of the separation would be to allow its streaming operations to boost content while not being weighed down by the slower-growth legacy cable business, which is seeing a decline in viewers. The cable channels still throw off decent good cash flow, but are struggling with high debt and declining subscribers as more consumers cut the cord.