Warner Bros. Discovery has unveiled financial projections showing a challenging outlook for its cable networks division through 2030, as the media giant navigates complex acquisition discussions with streaming competitors. The forecasts come amid ongoing negotiations that could reshape the company's structure and ownership.

Cable Networks Face Revenue Decline

The company's cable division, encompassing major networks including CNN, TNT, and Cartoon Network, faces a projected revenue decline over the next five years. The financial outlook reflects broader industry challenges as traditional cable television continues to lose ground to streaming platforms.

The projections exclude Turner Classic Movies but include the Discovery streaming service. Corporate expenses are factored into the calculations, though stock-based compensation is excluded from the EBITDA figures.

CNN Shows Growth Potential

Despite the overall cable decline, CNN represents a bright spot in Warner Bros.' cable portfolio. The news network is projected to experience revenue growth, driven primarily by new direct-to-consumer offerings.

The growth trajectory for CNN is largely attributed to new subscription products such as CNN All Access, which targets consumers seeking direct access to news content.

Competing Acquisition Offers

Warner Bros. Discovery currently faces competing acquisition proposals that value different aspects of its business portfolio. Netflix has presented an amended all-cash offer of $27.75 per share specifically for the streaming and studios business, while Paramount Skydance Corp. has proposed acquiring the entire company for $30.00 per share.

Paramount has argued that Warner Bros.' cable networks hold minimal value due to associated debt in the proposed spinoff structure. In contrast, Warner Bros.' financial advisers have provided a valuation range for the cable networks post-separation, spanning from $0.72 per share to $6.86 per share.

Streaming and Studios Growth Projections

While cable operations face headwinds, Warner Bros. projects substantial growth for its streaming and studios divisions. These units are expected to drive significant revenue expansion over the five-year projection period.

The streaming and studios projections include corporate expenses but exclude stock-based compensation, consistent with the cable division methodology.

Market Context and Strategic Implications

The financial projections underscore the broader transformation occurring within the media industry, as traditional cable television continues losing subscribers and advertisers to streaming alternatives. Warner Bros. Discovery's strategic planning reflects this shift, with the company positioning its streaming and content creation capabilities as primary growth drivers while acknowledging the declining trajectory of traditional cable operations.

Paramount Skydance Corp., led by David Ellison, has escalated its acquisition effort against Warner Bros. Discovery Inc. by filing a lawsuit over the studio's $82.7 billion merger agreement with Netflix Inc. The legal action represents a significant intensification in one of Hollywood's most high-profile corporate battles.

Legal Challenge in Delaware Court

Paramount filed the lawsuit in Delaware Court of Chancery, specifically seeking disclosure of the financial analysis that Warner Bros' board used to justify its Netflix deal. The primary objective is to provide shareholders with essential information needed to evaluate Paramount's competing offer before the tender offer expires on January 21.

Beyond the lawsuit, Paramount plans to nominate directors to Warner Bros' board to directly challenge the Netflix merger and influence shareholder decisions. The company has also proposed an amendment to Warner Bros' bylaws that would require shareholder approval for any spinoff of the cable TV business, which represents a key component of the Netflix agreement.

Competing Financial Offers

The two competing bids present shareholders with distinctly different value propositions:

Paramount argues that its all-cash bid offers superior financial terms, easier valuation for shareholders, and greater likelihood of clearing regulatory scrutiny. In contrast, Warner Bros maintains that the Netflix deal provides strategic value, particularly through the potential Discovery cable TV spinoff, which Paramount dismisses as having minimal worth.

Board Response and Financial Implications

Warner Bros' board has rejected Paramount's latest offer, characterizing Paramount's arguments as "meritless" and noting that the company has not increased its bid or addressed identified deficiencies. The board has also highlighted significant financial consequences of abandoning the Netflix deal, including a $2.8 billion termination fee as part of $4.7 billion in total additional costs.

Paramount contends that Warner Bros has never demonstrated that the Netflix deal is financially superior to its offer, suggesting the dispute may ultimately be resolved through a shareholder vote.

Industry and Content Control Stakes

The outcome of this corporate battle will determine control over Warner Bros' valuable content library, including major franchises such as Harry Potter, DC Comics, and HBO assets. This decision could significantly reshape Hollywood's content landscape and streaming industry power dynamics.

Key Developments Summary

The critical elements of this corporate showdown include:

• Legal Action: Lawsuit filed for full financial disclosure to aid shareholder decision-making
• Superior Offer Claims: Paramount's $108.7 billion all-cash proposal versus Netflix's mixed cash-and-stock deal
• Board Challenge: Planned director nominations to influence Warner Bros' shareholder vote
• Bylaw Changes: Proposed amendments requiring shareholder approval for Discovery TV spinoff
• Decision Deadline: January 21 deadline for shareholders to determine control of major entertainment assets

Shareholders now face a critical decision that will determine the future ownership and strategic direction of one of Hollywood's most significant content portfolios.