Warner Bros Discovery’s announcement this week that it would cut the value of its television networks by $9 billion (£7 billion) is a clear admission of the damage the streaming war is doing to traditional broadcast models.

The staggering figure, which gave the US entertainment group a quarterly net loss of $10 billion (£7.9 billion) and caused shares to fall 12 percent in early trading on Thursday, underscores that broadcasters such as CNN, TLC and Food Network can no longer rely on a solid cable subscriber base.

The rapid shift of consumers away from expensive TV packages and the inexorable decline in advertising forced traditional TV companies to invest billions in low-cost streaming services to catch up with frontrunners like Netflix.

The question now is whether companies like WBD – home to TV and film content such as Furiosa: A Mad Max Saga, Godzilla x Kong: The New Empire, The Big Bang Theory, Succession, Friends and all the Olympic events – can achieve the scale needed to generate significant profits from their streaming operations before linear TV via cable, satellite or antenna dies.

“Traditional television is dying, or at least it’s in zombie mode,” says Alex Degroote, a media analyst. “It’s being replaced by a combination of services like short-form video players like YouTube and TikTok and the top streamers like Netflix. WBD’s $9 billion impairment is a real hammer blow and will impact all traditional media assets.”

The market value of WBD, which includes the Warner Bros. film studio, HBO and CNN, has fallen by almost 70 percent in the two years since the group was formed in a $40 billion (£31.5 billion) merger between WarnerMedia and Discovery that was intended to help both companies weather the transition to a streaming future.

“Unfortunately, the stock performance is a clear indication that investors are not very optimistic that the tide will turn soon,” says Robert Fishman, senior analyst at MoffettNathanson.

Earlier this week, Disney announced that its streaming business – which includes the global service Disney+, Hulu and ESPN+ in the US and Hotstar in India – was profitable for the first time in the quarter ended June.

But the $447 million (£352 million) milestone, which was above management forecasts, came at a huge cost: the streaming services have posted losses of $11 billion (£9.2 billion) since Disney+ launched in 2019.

Disney has more than 200 million streaming subscribers worldwide and WBD has over 100 million worldwide. Discovery+ is now the fastest-growing service in the UK thanks to the rights to broadcast all Olympic events. But the battle is not just about continuing to push for scale.

Increasing revenue and profit per subscriber has become critical. These strategies include quick rounds of price increases—Disney just announced a series of price hikes for later this year—as well as introducing slightly cheaper, ad-supported plans to attract price-conscious consumers.

While traditional TV networks struggle to cope with the decline of their traditional businesses and are now undertaking drastic rounds of cost-cutting after lavish spending on content in the first decade of the streaming war, Netflix is ​​pointing the way to a viable future.

The streaming giant, which once struggled with mounting losses in the tens of billions of dollars, saw its market value increase by more than 50% last year after breaking even and continuing to see a significant increase in subscriber numbers.

WBD CEO David Zaslav had considered breaking up the company but concluded that was not the best option at the moment. He said the market was experiencing a “generational shift” that was forcing traditional TV broadcasters to take “bold, necessary steps.”

Richard Broughton, director at Ampere Analysis, said: “Traditional TV companies are in decline, but the change is not so rapid that it cannot be managed. There are still plenty of TV viewers, they have time to adapt to profitability in the streaming world.”