The spotlight is on crown jewels HBO, studios, the Warner Bros. film vault and DC Comics – but the fate of Warner Bros. Discovery could rest on the value of its much-maligned cable TV portfolio.
Discovery Global Networks, the corporate division that houses CNN, Food Network, TNT and two dozen other networks and digital brands, has often been uncharitably referred to as “CrapCo” (or a spicier variation of that pejorative that starts with and S). It’s mean, but cable’s contribution to media parent companies continues to fall and fall amid cord-cutting. Networks still throw off cash but they are declining assets that are being quarantined from Hollywood’s healthier, faster growing businesses.
Citing that downturn, Paramount‘s hostile, $108 billion cash offer for all of Warner Bros. Discovery values the networks division at a mere $1 a share.
Netflix is buying the studios and streaming assets in a deal valued at $82.7 billion, announced late last week. The spinoff of the new publicly traded cable company called Discovery global is expected in the third quarter of 2026. Paramount, rejected, launched its hostile offer on Monday. That drama will be playing out over the next weeks and months. The Netflix cash and stock bid works out to $27.75 a share. Paramount is at $30 a share cash. So the value of the cable assets — whether they bridge the gap between the two — is key.
That’s slightly rich given Par’s blue-sky view of its own distressed roster including MTV and Nickelodeon. It’s also significantly lower than where Netflix appears to peg it. Many Wall Street analysts are also more charitable. Bank of America’s Jessica Reif Ehrlich, a longtime bull on WBD shares, says its global networks could fetch as much as $5 a share. Netflix’s winning offer is in line with the general consensus valuing the cable networks at between $2 and $4 a share once they are spun off from the rest of WBD.
The spinoff had been planned for a year.
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Well aware of investors’ restlessness with cable assets, media companies have taken action. WBD reorganized into two divisions at the end of 2024, in preparation for a planned separation of Global Networks from Studios and Streaming. Comcast also decided to spin most of its NBCUniversal networks into a new stand-alone company, Versant, which will formally rise in January. Disney publicly flirted with cutting loose its networks before reconsidering. Its 50-50 partnership with Hearst, A+E Global Media, home of Lifetime, A&E and History, is actively considering a sale or other strategic moves. Disney and Fox Corp. both rolled out streaming services equipped with linear feeds of their top networks, positioning them as hedges against linear erosion. Lionsgate Studios split with Starz earlier this year.
Cable networks, even in 2025, still throw off a ton of cash, and this month brought a potential sign of the pay-TV bundle finally finding a bottom. Still, with the total number of households now below 70 million, from a peak north of 100 million in 2012, their profits continue to slide. Discovery Global’s EBITDA is projected to drop by more than 20% in 2026, according to analysts.
One high-level media executive notes that the brands established during cable’s heyday can drive other businesses in digital and streaming, making up some of the mounting linear deficit. “It’s not fashionable to say there is upside potential in these networks, but they don’t all just go to zero. There are enough things, especially news and sports, keeping them vital so there is a reason to not just abandon them altogether.”
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Robert Fishman of MoffettNathanson wrote in a recent note to clients that the value of Global Networks is “a critical question.” That valuation is based in large part on “how much net debt” remains on the books post separation. By insisting on the buck-a-share price, Paramount is arguing that WBD “has selected the wrong bidder” in Netflix, Fishman wrote. “Valuing such a business is inherently challenging given the nebulous outlook for linear networks in today’s cord-cutting environment, even if the cable networks business is maybe, just maybe, showing signs of life.”
Global Networks faces a difficult road ahead but it has a formidable stable, one enhanced by the 2018 merger of Food Network and HGTV parent Scripps Networks with Discovery. In 2024, full-year revenue in the division fell 5% from the prior year, coming in at $20.2 billion. More recently, ratings in the third quarter tumbled 26%, and the company has only recently hit a more significant speed bump as NBA games departed the company after more than four decades. The absence of the NBA will be felt over the coming months, particularly in the second quarter, which had been when WBD networks aired the playoffs.
Paramount has indicated that its “broader network scale can help bolster the Global Networks business, while the Netflix proposal and potential split will subject WBD shareholders to a ‘sub-scale, highly leveraged’ stub,” Guggenheim analyst Michael Morris wrote in a recent client. … “we estimate the value per share of the Warner Bros. Global Networks in a range of $2.50-$3.50 which would put Netflix’s $27.75 bid modestly above $30 per share.”
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Both deals need regulatory approval, in this case from the Department of Justice. Paramount CEO David Ellison has argued that it has the surest path to a green light.
“We are the best stewards not only to build long-term value for the asset but also delight audiences and help cultivate a more vibrant creative community. We funded, founded and then merged Skydance with Paramount and know the sacrifices and investment it takes to capitalize and grow a media business. I am passionate and dedicated to this pursuit, committed to putting my own money in, and that is why I am writing to you today,” Ellison said in a letter to WBD shareholders.
Netflix co-CEOS Ted Sarandos and Greg Peters expressed confidence this week that their offer would be a go. “We have a deal done, and we are incredibly happy with the deal. It’s great for shareholders, great for consumers. We think it’s a great way to create and protect jobs in the entertainment industry. We’re super confident we’re going to get it across the line,” Sarandos said at a media conference.
President Trump, as he is often wont to do, muddied the waters this week when he insisted that CNN should have new ownership and leadership, regardless of which of the two rivals wins WBD. It’s not at all clear how that would work. Trump said Sunday that he would be “involved” the approval process and, later, that he’s not particularly friendly with either side. Paramount’s investor group includes Affinity Partners, the investment firm of Trump’s son-in-law Jared Kushner. David Ellison’s father Larry Ellison is a major Trump backer.
So Paramount is aggressively wooing WBD shareholders to tender their stock by Jan. 8 deadline, which could be extended.
WBD must respond to Par’s hostile takeover offer by Dec. 22 although it could do so sooner.
