Is Warner Bros. Discovery Overvaluing Its TV Networks? Paramount Says Yes, and Here’s Why This Deal Could Change the Media Landscape Forever.
The battle for Warner Bros. Discovery (WBD) is heating up, and at the heart of the drama is a fundamental disagreement over the value of its TV networks. Paramount Skydance, in its bold and controversial hostile takeover bid, argues that WBD’s cable networks—think CNN, TBS, and others—are being overvalued in the company’s deal with Netflix. But here’s where it gets controversial: Paramount claims these networks are worth far less than WBD’s leadership is suggesting, making their own all-cash offer the superior choice for shareholders. And this is the part most people miss: the math behind these claims reveals a stark difference in how these media giants see the future of television.
Let’s break it down. Paramount’s latest offer of $30 per share (all in cash) values the entire WBD, including its TV business, at $77.9 billion. Meanwhile, Netflix’s $27.75 per share deal (84% cash) covers WBD’s film and TV studios, HBO, HBO Max, and its gaming division, totaling $72 billion—but it excludes the non-HBO TV networks. WBD’s board chose Netflix’s deal, implying they believe the TV networks are worth at least $2.25 per share. But Paramount disagrees, arguing these networks are worth closer to $1 per share, or about $2.6 billion in equity value.
Why the Discrepancy? Paramount’s David Ellison points out that the Netflix deal leaves WBD shareholders with a heavily indebted TV networks group, slated to spin off as Discovery Global in Q3 2026. “How is WBD attributing value to this equity?” Ellison asks, highlighting the uncertainty of a declining business burdened with debt. Paramount’s chief strategy officer, Andy Gordon, doubles down, noting that for Netflix’s deal to surpass Paramount’s offer, Discovery Global would need to trade at over five times its forward EBITDA—a valuation Wall Street analysts find overly optimistic.
But if WBD’s TV assets are declining, why does Paramount want them? Ellison explains it’s all about synergies. Combining WBD’s networks with Paramount’s existing linear business could unlock significant cost savings and operational efficiencies. “[Warner Bros. Discovery] Global Networks has some really great brands,” Gordon adds, emphasizing Paramount’s confidence in revitalizing these assets.
Here’s where it gets even more intriguing: Under the Netflix deal, Netflix would assume $10.7 billion of WBD’s debt, leaving Discovery Global with over $23 billion in debt. Gordon argues this would result in a net debt-to-EBITDA ratio of 3.5x, implying equity holders would see less than 1x EBITDA of value—or roughly $1 per share. For context, Versant, a competitor being spun off by Comcast, is valued at 4x-5x forward EBITDA with a lower leverage ratio.
So, who’s right? WBD hasn’t disclosed its valuation methodology for Discovery Global, leaving investors and analysts guessing. This lack of transparency has sparked debate: Is WBD overestimating the value of its TV networks to justify the Netflix deal, or is Paramount undervaluing them to sweeten its own offer? And what does this mean for the future of traditional TV in an increasingly streaming-dominated world?
As the media landscape continues to shift, one thing is clear: this battle isn’t just about numbers—it’s about vision. Paramount sees an opportunity to consolidate and revitalize linear TV, while WBD is betting on a future where streaming and studios take center stage. Which strategy will win out? And what does this mean for shareholders, viewers, and the industry at large? Let us know your thoughts in the comments—this is one debate you won’t want to miss.
