The “Bad Bank” of TV
While everyone focuses on the shiny new marriage between Netflix and HBO, I’m fascinated by the divorce that has to happen first. The deal structure leaves behind a new entity called “Discovery Global” - a collection of linear networks like CNN, TNT, and the Discovery Channel.
Netflix explicitly doesn’t want these assets. They are buying the studio and the streaming, but leaving the cable channels behind like furniture in a house they just sold. This creates a “stub” company that Paramount calls worthless (valuing it near zero) and WBD advisors value at up to $6.86 per share.
The Valuation Gap
This “stub” is now the battleground. Paramount’s entire argument rests on the idea that Netflix is leaving WBD shareholders with a dying asset. Netflix’s counter-argument is subtle: “Take our cash for the good stuff, and whatever you get from the cable channels is just a bonus.”
It’s a grim milestone for the cable era. A decade ago, these networks were the crown jewels of the industry. Today, they are the collateral damage in a streaming war, spun off into a lifeboat while the main ship sails away with the digital spoils.