Warner Bros Discovery has added fresh pressure to Netflix’s proposed $82.7 billion acquisition of the studio and HBO, after reporting a sharp decline in its traditional television business.
The media group, known for hit titles such as Heated Rivalry and Wuthering Heights, released fourth-quarter results showing a rapid deterioration in profitability across its cable networks.
Cable network decline weighs on deal valuation
Warner’s television division — which includes CNN, Discovery Channel and TNT — is not part of Netflix’s direct bid. However, the performance of these networks remains critical to the overall valuation of the company.
Investors would also receive the value of the planned spin-off of the TV unit, Discovery Global, if Netflix’s offer moves forward. As a result, weakening fundamentals in that division could influence how shareholders assess the attractiveness of the deal.
Revenue in the television segment fell 12% year over year to $4.2 billion. Adjusted earnings dropped 27% to $1.4 billion. Such declines reduce the standalone value of Discovery Global.
For comparison, Versant Media — the cable and digital assets spun off from Comcast earlier this year — trades at roughly three times its projected 2025 EBITDA of $2.1 billion. Applying a similar multiple to Discovery Global implies a market capitalization near $3 billion, or just over $1 per share, assuming $17 billion in net debt.
When combined with Netflix’s cash offer of $27.75 per share, the total value appears slightly below Paramount Skydance’s competing bid of $31 per share.
Paramount raises bid as negotiations continue
Paramount Skydance has increased its proposal to acquire all of Warner Bros to $110 billion. Warner’s board confirmed it is in discussions with the rival bidder to determine whether the revised offer could be superior to Netflix’s proposal.
Warner Bros CEO David Zaslav did not directly address the competing negotiations during the earnings call. Instead, he emphasized the competitive bidding process, noting that discussions with four bidders resulted in eight price increases and a 63% rise from the initial September offer.
Warner CFO Gunnar Wiedenfels declined to comment on valuation comparisons, while Netflix has not yet issued a public response.
Streaming growth offsets some weakness
Despite the challenges in its cable business, HBO Max continued to expand. Warner Bros added 3.5 million streaming subscribers during the quarter, bringing its global total to 131.6 million.
Streaming revenue rose 5% to nearly $2.8 billion. However, adjusted earnings in the segment fell 4% to $393 million, partly due to the expiration of a distribution agreement.
Analysts remain divided. Laura Martin of Needham & Co argued that selling the company may ultimately benefit shareholders, citing ongoing deterioration in core fundamentals.
Warner’s stock was largely unchanged in early trading.
Film division remains a strategic focus
Zaslav also highlighted the strength of Warner Bros’ film slate, including Wuthering Heights, A Minecraft Movie and Superman. He reaffirmed the company’s long-term commitment to theatrical releases, describing the motion picture business as central to its identity.
Netflix CEO Ted Sarandos has defended the acquisition strategy, stressing that theatrical releases will remain part of the studio’s approach if the deal proceeds — a notable shift from Netflix’s traditional streaming-first model.
If Warner’s board determines that Paramount’s offer is superior, Netflix would have four business days to submit a revised bid.
