TenQ

The Warner Bros. Discovery story

Warner Bros. Discovery owns Warner Bros., HBO Max, CNN and Discovery, with a proposed Paramount acquisition pending as it tests whether streaming growth can offset shrinking linear networks and support its debt burden.

Written from Warner Bros. Discovery's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $30.90share price, last close
  • $77.6Bmarket value
  • 11/36TenQ Score checks passed
  • 21.7%growth a year the price assumes

The story in brief

  • The merger matters. Paramount Skydance agreed to acquire Warner Bros. Discovery for $31.00 per share in cash, subject to regulatory approvals and other closing conditions.
  • Streaming gains were insufficient. In the quarter to June 2026, Streaming Adjusted EBITDA increased 63% excluding currency effects, but total Adjusted EBITDA declined 6% on the same basis.
  • Refinancing, not debt elimination. Warner Bros. Discovery replaced its $15 billion bridge loan with term loans in the quarter to June 2026, ending with $33.1 billion of gross debt and 3.4x net leverage.

What drives the business

  • Warner Bros. Discovery earns distribution fees, advertising revenue and content revenue across Streaming, Studios and Global Linear Networks, with a strategy of expanding HBO Max globally, strengthening Studios and managing declining linear television businesses.
  • The February 27, 2026 agreement with Paramount Skydance replaced the Netflix agreement covering Streaming and Studios with an acquisition of the entire company, and Paramount paid Netflix the $2.8 billion termination fee on Warner Bros. Discovery’s behalf.
  • Streaming had 131.6 million subscribers at December 31, 2025, and global HBO Max expansion and growth in subscribers on plans with advertising helped revenue reach $3,079 million and Adjusted EBITDA reach $512 million in the quarter to June 2026.
  • Studios draws on Warner Bros., DC and franchises including Harry Potter, but revenue fell 39% excluding currency effects to $2,328 million in the quarter to June 2026 as weaker theatrical results outweighed games growth from LEGO Batman: Legacy of the Dark Knight.
  • Global Linear Networks includes CNN, Discovery and TNT Sports, whose partnerships include Major League Baseball and the National Hockey League, but revenue fell 17% excluding currency effects to $3,991 million in the quarter to June 2026 amid subscriber losses and the absence of the NBA.

What the price assumes

At $30.90 per share, the reverse DCF implies that free cash flow after stock pay grows 21.7% a year for ten years, using a 10.2% discount rate.

That exceeds the 13.8% annual growth delivered over the last 10 years and the TenQ check’s 8.9% bar, which slows that record halfway toward 4%.

The proposed $31.00 cash acquisition is an important qualification, because the share price also reflects the transaction’s completion and timing rather than only expectations for independent cash flow growth.

Value WBD on your own assumptions

What could change the story

  • The Paramount transaction could be delayed or fail because of regulatory approvals, closing conditions or litigation, while the process could disrupt management and relationships with customers, employees and business partners.
  • Termination under specified circumstances could require Warner Bros. Discovery to pay Paramount $3.0 billion and reimburse the Netflix termination fee and certain other payments.
  • Linear advertising revenue fell 27% excluding currency effects in the quarter to June 2026, and domestic linear pay TV subscribers declined 10%, leaving streaming growth to offset continued erosion in the network business.
  • Over the last twelve months, revenue growth was -6.1% and the operating margin was -3.5%, while the TenQ checks failed on near-term liquidity and earnings coverage of interest.
  • Free cash flow was $572 million in the quarter to June 2026 versus $702 million a year earlier, with approximately $350 million of separation and transaction items weighing on cash generation.

What to watch next

  • The August 2026 earnings release gave no numerical operating guidance, making subsequent outlook commentary important for assessing streaming expansion, studio performance and cash generation.
  • The next releases can show whether Streaming’s 10% revenue growth excluding currency effects in the quarter to June 2026 continues to translate into higher Adjusted EBITDA as international marketing and content spending increase.
  • Cash flow, gross debt and net leverage will show whether the bridge refinancing is followed by debt reduction rather than another change in financing structure.
  • Merger updates should clarify regulatory progress and closing timing, with the agreement adding daily cash consideration after September 30, 2026, capped at $0.25 per 90 calendar day period.

Sources

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