(Bloomberg) -- Warner Bros. Discovery Inc. is projecting declining revenue and profit over the next five years for its cable networks, which the company plans to spin off before selling the streaming and studios business to Netflix Inc.
Total revenue for Warner Bros.’ channels, which include CNN, TNT and the Cartoon Network, will fall to $15.6 billion in 2030 from $16.9 billion projected this year, the company said Tuesday in a filing related to its Netflix deal. Earnings before interest, taxes, depreciation and amortization will shrink to $3.2 billion from $4.8 billion.
The cable projections leave out the Turner Classic Movies channel, but include the Discovery streaming service. They include corporate expenses, but leave out stock-based compensation.
Cable-TV networks have been losing subscribers and advertisers as viewers shift to streaming options. The value of Warner Bros.’ cable business has been hotly contested as the company weighed acquisition bids from both Netflix and Paramount Skydance Corp.
Paramount had offered to acquire all of Warner Bros. for $30 a share and has argued that the company’s cable networks are essentially worthless given the debt involved in the spinoff, making its bid superior to Netflix’s proposal.
Netflix, which reached an amended, all-cash agreement with Warner Bros. on Tuesday, has offered to pay $27.75 a share for the streaming and studios business.
Warner Bros.’ advisers provided a range of values for the cable networks, from as little as 72 cents a share to as much as $6.86 a share after the separation, according to the filing. Warner Bros. argues the additional upside from the eventual spinoff of the cable assets makes the Netflix deal superior.
Warner Bros. projects growth for CNN, with revenue expected to reach $2.2 billion in 2030 from $1.8 billion in 2026. That’s largely due to new direct-to-consumer subscription products such as CNN All Access. Profit would stay flat at $600 million annually or rise to $700 million, according to two projections.
In contrast to the cable business, Warner Bros. sees major growth for is streaming and studios units over the next five years, with revenue climbing to $34.1 billion in 2030 from $24.3 billion this year. Ebitda, after corporate expenses but before stock-based compensation, would rise to $8.4 billion from $3.5 billion.
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