A core argument of Paramount Skydance‘s hostile takeover bid for Warner Bros. Discovery is this: WBD’s cable networks like CNN and TBS are not worth as much as the David Zaslav-led company’s deal with Netflix implies, Paramount claims.
It’s hard to do an apples-to-apples comparison of the two proposals. But here’s how the math works out, according to Paramount. The most recent $30/share offer from Paramount Skydance (all cash) is for the full company, including its TV biz (equity value: $77.9 billion). Netflix’s $27.75/share agreement with WBD (84% cash) covers the Warner Bros. TV and film studios arms, plus HBO, HBO Max and the games division (equity value: $72 billion) — excluding the non-HBO TV networks.
Since Warner Bros. Discovery accepted Netflix’s deal terms and rejected Paramount’s proposal, the assumption is that WBD’s board concluded the Netflix offer was in the best interests of Warner Bros. and its stockholders — i.e., Netflix’s offer was worth more than Paramount’s.
That would imply WBD is ascribing a value of at least $2.25/share to the TV networks group, slated to be named Discovery Global and spun off in Q3 2026 ahead of the proposed Netflix transaction. But Paramount argues that the value of WBD’s networks group is in fact much lower: roughly $1/share, working out to an equity valuation of about $2.6 billion.
“Even after assigning value to the global network stub, total value to WBD shareholders in the Netflix deal does not exceed $30 per share, and ours is in 100% cash,” Ellison told investors on a call Monday. “The Netflix deal leaves [Warner Bros. Discovery] shareholders with a highly levered declining global network stub, creating value uncertainty.”
“The Netflix proposal leaves shareholders with stock in WBD’s Global Networks business, which is saddled with debt,” Ellison added. “How is WBD attributing value to this equity?”
Warner Bros. Discovery did not respond to a request for comment.
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WBD has not disclosed how it’s valuing the proposed Discovery Global spin-off “despite its significance to the economics of the Netflix proposal,” Andy Gordon, Paramount’s chief strategy officer and COO, said on Monday’s call.
Here’s additional math, as outlined by Gordon: For Netflix’s proposal to exceed Paramount’s $30 all-cash offer, WBD’s Global Networks group would need to trade at more than five times forward EBITDA (earnings before interest, taxes, depreciation and amortization) — higher than Wall Street analysts’ consensus estimates for Global Networks to be worth 4.5 times forward EBITDA. Financial analysts value WBD Global Networks’ closes competitor, Versant — the entity that Comcast is spinning off from NBCUniversal — at 4x-5x forward EBITDA.
Under WBD’s deal with Netflix, Netflix would assume $10.7 billion of Warner Bros. Discovery’s debt. So the implication is that Discovery Global entity would take on more than $23 billion of WBD’s debt load (which stood at $34.5 billion of gross debt as of the end of Q3).
Because WBD’s Global Networks is expected to have 3.5x net debt-to-EBITDA ratio and a 4.5x enterprise value multiple, according to Gordon, “one can imply there is less than 1x EBITDA of value in the business for equity holders, or roughly $1 a share.” He said Versant is expected to have a lower leverage ratio than WBD’s networks; Versant, with an anticipated 1.25x net debt-to-EBITDA ratio, would be expected to carry a 3x EBITDA value.
But if WBD’s TV assets are a “declining” business, why does Paramount want them? Ellison addressed this on the call: “One of the reasons why we are so interested in [the Warner Bros. Discovery television business] and want to acquire it is because when you put together with our linear business, there are significant synergies.”
Gordon added that Paramount execs believe “that we can actually do a really good job on the synergy potential that we talked about and helping with that customer constituency and have confidence now that we’ve owned [Paramount’s TV business] for a bit and understanding what we can do with those brands. And let’s be clear, [Warner Bros. Discovery] Global Networks has some really great brands.”
In June 2025, WBD announced plans to separate its streaming and studios business (under the Warner Bros. banner, led by Zaslav) and its TV networks group (as Discovery Global, headed by current WBD CFO Gunnar Wiedenfels) into two separate publicly traded companies. Discovery Global will comprise properties including cable networks CNN, TBS, TNT, Discovery Channel, HGTV, Food Network, OWN, TLC, Magnolia Network and Travel Channel; TNT Sports in the U.S.; free-to-air channels in Europe; and digital products including Discovery+ and Bleacher Report.
The separation of Discovery Global is now expected to be completed in third quarter 2026, prior to the closing of the Netflix transaction — unless, of course, Paramount Skydance’s rival bid prevails.
From Variety US