{"id":340051,"date":"2025-12-10T01:08:09","date_gmt":"2025-12-10T01:08:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/340051\/"},"modified":"2025-12-10T01:08:09","modified_gmt":"2025-12-10T01:08:09","slug":"paramount-says-wbd-overvaluing-tv-nets-so-netflix-deal-seems-superior","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/340051\/","title":{"rendered":"Paramount Says WBD Overvaluing TV Nets So Netflix Deal Seems Superior"},"content":{"rendered":"

\n\tA core argument of Paramount Skydance<\/a>\u2018s hostile takeover bid<\/a> for Warner Bros. Discovery<\/a> is this: WBD\u2019s cable networks like CNN and TBS are not worth as much as the David Zaslav-led company\u2019s deal with Netflix implies, Paramount claims.<\/p>\n

\n\tIt\u2019s hard to do an apples-to-apples comparison of the two proposals. But here\u2019s how the math works out, according to Paramount. The most recent $30\/share offer from Paramount Skydance (all cash)<\/a> is for the full company, including its TV biz (equity value: $77.9 billion). Netflix\u2019s $27.75\/share agreement with WBD (84% cash)<\/a> covers the Warner Bros. TV and film studios arms, plus HBO, HBO Max and the games division (equity value: $72 billion) \u2014 excluding the non-HBO TV networks.<\/p>\n

\n\tSince Warner Bros. Discovery accepted Netflix\u2019s deal terms and rejected Paramount\u2019s proposal, the assumption is that WBD\u2019s board concluded the Netflix offer was in the best interests of Warner Bros. and its stockholders \u2014 i.e., Netflix\u2019s offer was worth more than Paramount\u2019s.<\/p>\n

\n\tThat 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\u2019s networks group is in fact much lower: roughly $1\/share, working out to an equity valuation of about $2.6 billion.<\/p>\n

\n\t\u201cEven 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,\u201d Ellison told investors on a call Monday. \u201cThe Netflix deal leaves [Warner Bros. Discovery] shareholders with a highly levered declining global network stub, creating value uncertainty.\u201d <\/p>\n

\n\t\u201cThe Netflix proposal leaves shareholders with stock in WBD\u2019s Global Networks business, which is saddled with debt,\u201d Ellison added. \u201cHow is WBD attributing value to this equity?\u201d <\/p>\n

\n\tWarner Bros. Discovery did not respond to a request for comment.<\/p>\n

\n\tWBD has not disclosed how it\u2019s valuing the proposed Discovery Global spin-off \u201cdespite its significance to the economics of the Netflix proposal,\u201d Andy Gordon, Paramount\u2019s chief strategy officer and COO, said on Monday\u2019s call. <\/p>\n

\n\tHere\u2019s additional math, as outlined by Gordon: For Netflix\u2019s proposal to exceed Paramount\u2019s $30 all-cash offer, WBD\u2019s Global Networks group would need to trade at more than five times forward EBITDA (earnings before interest, taxes, depreciation and amortization) \u2014 higher than Wall Street analysts\u2019 consensus estimates for Global Networks to be worth 4.5 times forward EBITDA. Financial analysts value WBD Global Networks\u2019 closes competitor, Versant \u2014 the entity that Comcast is spinning off from NBCUniversal<\/a> \u2014 at 4x-5x forward EBITDA.<\/p>\n

\n\tUnder WBD\u2019s deal with Netflix, Netflix would assume $10.7 billion of Warner Bros. Discovery\u2019s debt. So the implication is that Discovery Global entity would take on more than $23 billion of WBD\u2019s debt load (which stood at $34.5 billion of gross debt as of the end of Q3).<\/p>\n

\n\tBecause WBD\u2019s Global Networks is expected to have 3.5x net debt-to-EBITDA ratio and a 4.5x enterprise value multiple, according to Gordon, \u201cone can imply there is less than 1x EBITDA of value in the business for equity holders, or roughly $1 a share.\u201d He said Versant is expected to have a lower leverage ratio than WBD\u2019s networks; Versant, with an anticipated 1.25x net debt-to-EBITDA ratio, would be expected to carry a 3x EBITDA value.<\/p>\n

\n\tBut if WBD\u2019s TV assets are a \u201cdeclining\u201d business, why does Paramount want them? Ellison addressed this on the call: \u201cOne 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.\u201d<\/p>\n

\n\tGordon added that Paramount execs believe \u201cthat 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\u2019ve owned [Paramount\u2019s TV business] for a bit and understanding what we can do with those brands. And let\u2019s be clear, [Warner Bros. Discovery] Global Networks has some really great brands.\u201d<\/p>\n

\n\tIn 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.<\/p>\n

\n\tThe separation of Discovery Global is now expected to be completed in third quarter 2026, prior to the closing of the Netflix transaction \u2014 unless, of course, Paramount Skydance\u2019s rival bid prevails.<\/p>\n

\n\tRELATED: David Ellison Courted Warner Bros. Discovery\u2019s Zaslav Hard Over 12 Weeks to Win a Deal. Then WBD\u2019s Chief Stopped Responding to His Texts<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"A core argument of Paramount Skydance\u2018s hostile takeover bid for Warner Bros. Discovery is this: WBD\u2019s cable networks…\n","protected":false},"author":2,"featured_media":304367,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54],"tags":[88,48502,92,10343],"class_list":{"0":"post-340051","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tv","8":"tag-entertainment","9":"tag-paramount-skydance","10":"tag-tv","11":"tag-warner-bros-discovery"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/340051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=340051"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/340051\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/304367"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=340051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=340051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=340051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}