In a whirlwind few weeks for the media world, Warner Bros. Discovery has firmly rejected not one, not two, but three takeover bids from Paramount Skydance — the latest pegged at $23.50 per share. These weren’t back-of-the-napkin offers either: the top bid valued Warner at nearly $60 billion and even dangled the promise of a shared CEO title for Warner boss David Zaslav. But Zaslav and the board didn’t blink. In fact, they doubled down on Warner’s previously announced strategy to split the company in two — streaming and studios on one side, and linear cable networks on the other. Meanwhile, major tech and media giants like Comcast, Netflix, Amazon, and Apple are circling the waters. With activist shareholders and regulators watching closely, Warner’s decision to say “no” could reshape not just its own future, but also the future of Hollywood’s power structure. So what does this all mean for Warner’s valuation and the road ahead?
Creative Momentum Is Real & Starting To Show Results
It’s easy to forget how far Warner Bros. has come in just a few years. After merging Discovery and WarnerMedia in 2022, the new company was saddled with $35 billion in debt, a clunky streaming operation, and the remnants of a bloated content machine. Fast forward to now, and the picture looks different — not perfect, but clearly improving. At the Q2 earnings call, CEO David Zaslav highlighted Warner’s record-breaking studio performance: five consecutive films opened to more than $45 million at the domestic box office. HBO and HBO Max pulled in over 3.4 million new subscribers in Q2 alone, and the service has quietly become the 3 global streamer with 125.7 million subs.
And then there’s the IP strategy. DC Studios is being rebooted under James Gunn, with a new Superman film already underway. Harry Potter is coming back in a 10-year television arc. Lord of the Rings, The Goonies, Gremlins, even Practical Magic — they’re all being dusted off and put back to work. Importantly, Warner isn’t just flooding the zone. There’s a calculated plan to release 2-3 tentpole titles a year, layered with fresh content from HBO, Warner Bros. Television, and New Line Cinema. And by combining HBO and Warner TV under tighter coordination, shows like The Pitt are now being developed with both quality and franchise longevity in mind.
All of this reinforces the company’s decision to resist a sale: momentum is building, and Warner wants to own the upside.
Streaming Economics Are Improving Faster Than Expected
Let’s be clear — HBO Max wasn’t exactly winning when Warner and Discovery tied the knot. But the turnaround has been faster than most expected. Warner now expects its streaming business to generate over $1.3 billion in adjusted EBITDA in 2025 and to surpass 150 million global subscribers by the end of 2026. That’s a real business — and one that gets more valuable as streaming matures.
A big part of the improvement is Warner’s newfound pricing discipline. It has avoided aggressive price hikes and instead focused on scaling with quality content, reducing churn, and bundling strategically. Recent partnerships with Disney and international MVPDs have helped expand reach while maintaining LTVs. Even better, the company is still in the first inning of cracking down on password sharing — which Netflix has shown can translate into real subscriber growth and improved margins.
There’s also a clear pivot away from broad licensing. While Warner owns the biggest film and TV library in the world, it’s being far more selective about where and how it licenses that content. The priority now is to make HBO Max the exclusive home for the best of Warner’s IP — think The Last of Us, White Lotus, House of the Dragon — and let that exclusivity drive growth.
The economics of this strategy are already showing up. Forward enterprise value to EBITDA has risen from 6.1x a year ago to 9.55x today. And Warner’s LTM EV/EBITDA now stands at 10.46x — a premium that’s been hard-earned through cost cuts, deleveraging, and better streaming margins.
The Studio Split Could Unlock Value (If Done Right)
Zaslav’s big bet isn’t on selling Warner, it’s on splitting it. By 2026, the company plans to separate into two independent, publicly traded businesses: one focused on content creation and streaming (Warner Bros. Studios and HBO Max), and the other housing the legacy linear TV networks (Discovery, CNN, TNT, etc.). This isn’t just a structural shuffle — it’s a strategy aimed at maximizing optionality in a fast-changing media landscape.
For one, splitting the studio business from the declining cable side could make it easier to attract premium valuations or suitors in the future. It’s no secret that buyers like Netflix or Apple want the content and IP, but not the baggage of legacy networks. By carving out the fast-growing streaming and studio units, Warner makes itself a more digestible acquisition target — if not now, then post-split.
Zaslav has already rejected multiple takeover offers because he believes Warner is worth at least $30 a share — well above the $23.50 Paramount bid. Analysts like Jessica Reif Ehrlich agree, estimating Warner’s fair value around that level due to its content library and streaming trajectory. With the company’s current EV/Revenue multiple at 2.17x and EV/EBITDA at 10.46x (both up significantly from just a year ago), the market seems to be inching toward that view.
If Warner executes the split cleanly — and keeps delivering box office hits and streaming subs — the company could command a premium valuation for each half. That’s the bet Zaslav is making.
Debt & Legacy Networks Still Weigh On The Business
While there’s a lot to like about Warner’s recent performance, it’s not all sunshine and subscriber growth. The company still carries a massive $35 billion debt load — a figure that has deterred even serious suitors like Paramount. Any buyer would need deep pockets just to cover that liability before even getting to the cost of acquisition.
On top of that, the linear cable networks business — which includes CNN, TNT, TBS, Discovery Channel and others — continues to face secular decline. Cord-cutting is real, ad revenue is shrinking, and affiliate fees aren’t enough to offset the trend. That’s why Zaslav wants to isolate this segment in the planned split. But until that happens, the drag is very much part of Warner’s story.
Also, Warner’s earnings metrics reflect these challenges. Its trailing price to earnings multiple is 68.15x — unusually high due to uneven earnings. Meanwhile, its LTM EV/Gross Profit stands at 4.90x, and its LTM Price/Sales is 1.36x. These are reasonable but not screamingly cheap, especially when weighed against declining legacy segments.
And while the Writers Guild and possibly regulators push back on media consolidation, any potential deal — whether it’s with Paramount, Comcast, or Big Tech — will face serious antitrust scrutiny. That could limit strategic flexibility just when Warner wants to go on offense.
Final Thoughts: Valuation Catch-Up Or Head Fake?
Warner Bros. Discovery’s decision to reject Paramount’s $23.50 per share offer is more than just a tactical move — it’s a declaration of confidence in its standalone value. With shares up 46% since September and recent forward valuation multiples rising (NTM EV/EBITDA at 9.55x and NTM EV/Revenue at 2.22x), the market seems to be warming to the idea that Warner is worth more than what Ellison offered.
Still, risks remain. The company’s LTM EV/EBIT of 53.00x and a P/E ratio distorted by lumpy earnings suggest that profitability — not just revenue growth — will be key to sustaining these valuations. The looming split in 2026 adds complexity, and its $35 billion debt pile limits flexibility.
Whether Warner is undervalued or fairly priced will depend on execution: can it keep churning out hits, grow streaming subs, and pull off the split without stumbling? The market’s giving it a chance — now it’s on Warner to deliver.
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