Warner Bros. Discovery's (WBD) recently announced split will present new opportunities to "confront secular headwinds" in linear TV and avenues to drive greater scale in direct-to-consumer, UBS said in a note emailed Tuesday.

Warner Bros. on Monday said it intends to separate into two publicly traded media companies by mid-2026.

The company will split its business into Streaming & Studios and Global Networks, with the latter retaining up to a 20% share in Streaming & Studios that is expected to be monetized to reduce debt.

According to UBS, the transaction could set the stage for additional industry consolidation and present new synergy opportunities.

Meanwhile, the firm estimated the S&S business could generate $2.9 billion of earnings before interest, taxes, depreciation, and amortization in 2025, growing to $3.3 billion in 2026, assuming a 50/50 split of corporate overhead.

"We believe the return to the HBO brand should lead to a more focused content strategy/budget," the firm said.

For GN, the firm said it was estimating $6 billion in EBITDA for 2025, which would decline to $5.3 billion in 2026 with a focus on cash generation and debt paydown.

"While the transaction could better highlight underlying asset value, we await improved visibility on the ramp in studio/streaming EBITDA and expect secular challenges for entertainment based linear TV assets to continue," the firm wrote.

UBS has a neutral rating on the stock with a $9 price target.

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