Is Warner Bros. Discovery Overvaluing Its TV Networks? Paramount Says Yes, and Here’s Why the Netflix Deal Might Not Be the Best Bet
In a bold move that’s sparking heated debates in the media industry, Paramount Skydance is challenging Warner Bros. Discovery’s (WBD) recent deal with Netflix, claiming that WBD’s TV networks are being overvalued. But here’s where it gets controversial: Paramount argues that the Netflix agreement, which WBD accepted over Paramount’s hostile takeover bid, significantly overestimates the worth of networks like CNN and TBS. This raises a critical question: Are WBD’s shareholders getting the best deal, or is there more to the story than meets the eye?
Let’s break it down in a way that even beginners can follow. Paramount’s latest offer of $30 per share (all in cash) values the entire WBD, including its TV business, at $77.9 billion. In contrast, Netflix’s $27.75 per share deal (84% cash) covers WBD’s film and TV studios, HBO, HBO Max, and the games division, totaling $72 billion—but it excludes the non-HBO TV networks. So, where’s the discrepancy? Paramount claims that WBD’s board is attributing at least $2.25 per share to the TV networks group, slated to spin off as Discovery Global in Q3 2026. However, Paramount insists these networks are worth far less—around $1 per share, or roughly $2.6 billion in equity value.
And this is the part most people miss: Paramount’s David Ellison points out that even with the Netflix deal, WBD shareholders would end up with a highly leveraged, declining TV network business, creating significant value uncertainty. Ellison questions, “How is WBD attributing value to this equity when it’s saddled with debt?” This counterpoint invites a deeper discussion: Is WBD’s strategy sound, or is Paramount’s all-cash offer the safer bet?
To add fuel to the fire, Paramount’s chief strategy officer, Andy Gordon, highlights that for Netflix’s deal to surpass Paramount’s $30 all-cash offer, WBD’s Global Networks would need to trade at more than five times forward EBITDA—a valuation higher than Wall Street’s consensus estimates. For context, analysts value WBD’s closest competitor, Versant (Comcast’s spin-off from NBCUniversal), at 4x-5x forward EBITDA. Gordon further notes that under the Netflix deal, Discovery Global would inherit over $23 billion of WBD’s debt, leaving equity holders with less than 1x EBITDA of value, or roughly $1 per share. “Why does this matter?” you might ask. It suggests that WBD’s TV networks might not be the golden goose they’re being made out to be.
But if these TV assets are indeed ‘declining,’ why is Paramount so eager to acquire them? Ellison explains that combining WBD’s networks with Paramount’s linear business would unlock significant synergies. Gordon adds, “We believe we can maximize the potential of these brands and create value for our customers.” This raises another thought-provoking question: Could Paramount’s vision for these networks be the key to their revival?
As WBD prepares to split into two publicly traded companies—Warner Bros. (streaming and studios) and Discovery Global (TV networks)—by Q3 2026, the stakes are higher than ever. Will Paramount’s rival bid prevail, or will the Netflix deal close as planned? The outcome could reshape the media landscape for years to come.
What do you think? Is WBD’s board making the right call, or is Paramount’s critique spot-on? Share your thoughts in the comments—this debate is far from over!
