Paramount says CNN and the rest of Warner's cable channels are worth only $2.5 billion. How can that be?

"Specifically: What are all of those shrinking cable networks worth? Which leads us to a pretty weird place: Paramount CEO David Ellison, who wants to buy all of WBD - including its cable networks - is arguing that those cable networks aren't worth very much at all. And Netflix, which doesn't want to buy those cable networks, is implicitly arguing that they're worth much more."

"Which means Netflix, and WBD executives who have blessed the Netflix offer, will want investors to think the cable networks are valuable. Ellison wants them to think the opposite. Bloomberg puts it well: "The lower you value the cable assets, the greater advantage Paramount's bid has. If shareholders believe the cable operations are more highly valued, then Netflix's bid, which assumes they will be spun off, means investors get an overall bigger sum of money.""

Paramount CEO David Ellison is pursuing a purchase of Warner Bros. Discovery that would include its cable networks. The primary strategic prize in the bidding is control of HBO and the Warner movie studio. The valuation of WBD's cable networks — including CNN, TNT, and the Food Network — is a pivotal point that influences which bid is more attractive. Netflix's plan would spin the cable assets into a new company and pay cash and stock for the remaining HBO-and-studio business. Ellison estimates the spin-off at about $1 per WBD share, while independent analysts place it closer to $4 per share, creating a substantial gap that affects investor returns.

Read at Business Insider