{"id":443211,"date":"2025-12-12T22:44:12","date_gmt":"2025-12-12T22:44:12","guid":{"rendered":"https:\/\/www.europesays.com\/us\/443211\/"},"modified":"2025-12-12T22:44:12","modified_gmt":"2025-12-12T22:44:12","slug":"warner-bros-discovery-battle-hinge-in-part-on-value-of-cable-networks","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/443211\/","title":{"rendered":"Warner Bros Discovery Battle Hinge In Part On Value Of Cable Networks"},"content":{"rendered":"

\n\tThe spotlight is on crown jewels HBO, studios, the Warner Bros. film vault and DC Comics \u2013 but the fate of Warner Bros. Discovery<\/a> could rest on the value of its much-maligned cable TV<\/a> portfolio.<\/p>\n

\n\tDiscovery 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 \u201cCrapCo\u201d (or a spicier variation of that pejorative that starts with and S). It\u2019s mean, but cable\u2019s 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\u2019s healthier, faster growing businesses.<\/p>\n

\n\tCiting that downturn, Paramount<\/a>\u2018s hostile, $108 billion cash offer for all of Warner Bros. Discovery values the networks division at a mere $1 a share. <\/p>\n

\n\tNetflix is buying the studios and streaming assets in a deal valued at $82.7 billion<\/a>, 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<\/a>. That drama will be playing out over the next weeks and months. The Netflix<\/a> 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 \u2014 whether they bridge the gap between the two \u2014 is key.<\/p>\n

\n\tThat\u2019s slightly rich given Par\u2019s blue-sky view of its own distressed roster including MTV and Nickelodeon. It\u2019s also significantly lower than where Netflix appears to peg it. Many Wall Street analysts are also more charitable. Bank of America\u2019s Jessica Reif Ehrlich, a longtime bull on WBD<\/a> shares, says its global networks could fetch as much as $5 a share. Netflix\u2019s 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. <\/p>\n

\n\tThe spinoff had been planned for a year. <\/p>\n

\n\tRELATED: Democratic Lawmakers Warn Warner Bros. Discovery Of National Security Concerns In Paramount Bid Because Of Saudi And Other Foreign Investors<\/a><\/strong><\/p>\n

\n\tWell aware of investors\u2019 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.<\/p>\n

\n\tCable 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<\/a>. 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\u2019s EBITDA is projected to drop by more than 20% in 2026, according to analysts.<\/p>\n

\n\tOne high-level media executive notes that the brands established during cable\u2019s heyday can drive other businesses in digital and streaming, making up some of the mounting linear deficit. \u201cIt\u2019s not fashionable to say there is upside potential in these networks, but they don\u2019t 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.\u201d<\/p>\n

\n\tRELATED: Netflix-WB Deal Will Be Approved & Trump Will Climb Aboard, Regulatory Expert Predicts: \u201cThe Deal Gets Done\u201d<\/a><\/strong><\/p>\n

\n\tRobert Fishman of MoffettNathanson wrote in a recent note to clients that the value of Global Networks is \u201ca critical question.\u201d That valuation is based in large part on \u201chow much net debt\u201d remains on the books post separation. By insisting on the buck-a-share price, Paramount is arguing that WBD \u201chas selected the wrong bidder\u201d in Netflix, Fishman wrote. \u201cValuing such a business is inherently challenging given the nebulous outlook for linear networks in today\u2019s cord-cutting environment, even if the cable networks business is maybe, just maybe, showing signs of life.\u201d<\/p>\n

\n\tGlobal 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.<\/p>\n

\n\tParamount has indicated that its \u201cbroader network scale can help bolster the Global Networks business, while the Netflix proposal and potential split will subject WBD shareholders to a \u2018sub-scale, highly leveraged\u2019 stub,\u201d Guggenheim analyst Michael Morris wrote in a recent client. \u2026 \u201cwe estimate the value per share of the Warner Bros. Global Networks in a range of $2.50-$3.50 which would put Netflix\u2019s $27.75 bid modestly above $30 per share.\u201d<\/p>\n

\n\tRELATED: WBD\u2019s David Zaslav Says \u201cWe Have An Active Process Underway\u201d In First Public Comments Since Company Put Itself Up For Sale<\/a><\/strong><\/p>\n

\n\tBoth 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. <\/p>\n

\n\t\u201cWe 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,\u201d Ellison said in a letter to WBD shareholders.<\/a><\/p>\n

\n\tNetflix co-CEOS Ted Sarandos and Greg Peters expressed confidence<\/a> this week that their offer would be a go. \u201cWe have a deal done, and we are incredibly happy with the deal. It\u2019s great for shareholders, great for consumers. We think it\u2019s a great way to create and protect jobs in the entertainment industry. \u2029We\u2019re super confident we\u2019re going to get it across the line,\u201d Sarandos said at a media conference.<\/p>\n

\n\tPresident 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\u2019s not at all clear how that would work. Trump said Sunday that he would be \u201cinvolved\u201d the approval process and, later, that he\u2019s not particularly friendly with either side. Paramount\u2019s investor group includes Affinity Partners<\/a>, the investment firm of Trump\u2019s son-in-law Jared Kushner. David Ellison\u2019s father Larry Ellison is a major Trump backer.<\/p>\n

\n\tSo Paramount is aggressively wooing WBD shareholders<\/a> to tender their stock by Jan. 8 deadline, which could be extended. <\/p>\n

\n\tWBD must respond to Par\u2019s hostile takeover offer by Dec. 22 although it could do so sooner.<\/p>\n","protected":false},"excerpt":{"rendered":"The spotlight is on crown jewels HBO, studios, the Warner Bros. film vault and DC Comics \u2013 but…\n","protected":false},"author":3,"featured_media":308282,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[37376,171,8396,4659,198868,15329,94168,173,67,132,68,27281,66550],"class_list":{"0":"post-443211","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tv","8":"tag-cable-tv","9":"tag-entertainment","10":"tag-mergers-and-acquisitions","11":"tag-netflix","12":"tag-netflix-wb","13":"tag-paramount","14":"tag-pay-tv","15":"tag-tv","16":"tag-united-states","17":"tag-unitedstates","18":"tag-us","19":"tag-warner-bros-discovery","20":"tag-wbd"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115709022390527414","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/443211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=443211"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/443211\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/308282"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=443211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=443211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=443211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}