*

Warner Bros' TV revenue and income decline significantly

*

Discovery Global's standalone value impacted by revenue

and

income drop

*

Netflix ( NFLX ) has four days to revise offer if Paramount's bid

is

favored

*

Warner Bros adds 3.5 million streaming subscribers in Q4

(Adds conference call details, bullets)

By Dawn Chmielewski

Feb 26 (Reuters) -

Warner Bros Discovery ( WBD ) heaped an additional burden on

Netflix's ( NFLX ) $82.7 billion bid for the movie studio and

HBO.

The entertainment company behind the buzzy series "Heated

Rivalry" and the film "Wuthering Heights" reported

fourth-quarter earnings Thursday that showed profit at its cable

channels is deteriorating at a fast pace.

The networks, which include CNN, the Discovery Network and

TNT, are not part of

Netflix's ( NFLX ) deal

. But their worth as a separately traded company is a key

component in valuing the streaming service's offer for the

Warner Bros film and TV studios, its library, HBO and the HBO

Max streaming service.

Rival Paramount Skydance ( PSKY )

raised its proposal

to buy all of Warner Bros to $110 billion. On Tuesday, the

Warner board said it is negotiating with the rival bidder to

determine whether the revised proposal could result in a deal

superior to Netflix's ( NFLX ) offer.

Warner Bros Chief Executive David Zaslav did not address the

discussions on a call with investors Thursday. Instead, he

highlighted his role in sparking a bidding war for the coveted

assets.

"We engaged with four bidders, which led to eight price

increases, and have thus far achieved a 63% increase in value

versus the first offer received in September, delivering

significant value to WBD shareholders throughout the process,"

Zaslav told investors.

Warner's board had previously determined Netflix's ( NFLX ) offer was

superior to Paramount's because investors would also receive the

value of its planned spin-off of the television group, Discovery

Global.

The division's revenue fell to $4.2 billion, down 12% from a

year earlier, and adjusted income dropped to $1.4 billion, a 27%

plunge from the same quarter a year earlier. Such declines

affect the value of the TV networks as a standalone business,

Discovery Global.

Its

closest comparison

is Versant Media, the cable and digital assets separated

from Comcast ( CMCSA ) earlier this year. Versant's enterprise is worth

roughly 3 times its 2025 forecast EBITDA of $2.1 billion. On the

same yardstick, Discovery Global's market capitalization would

be approximately $3 billion or a little over $1 per share,

assuming $17 billion in net debt.

Add that to Netflix's ( NFLX ) cash offer of $27.75 per share and it

comes in shy of Paramount's bid of $31.

Warner CFO Gunnar Wiedenfels declined to address that

comparison. Netflix ( NFLX ) did not immediately reply to a request for

comment.

HBO Max continued to grow, helped by series like "Heated

Rivalry" and "It: Welcome to Derry." Warner Bros added 3.5

million streaming subscribers in the quarter, bringing its total

number worldwide to 131.6 million.

The streaming group's revenue rose 5% to nearly $2.8

billion, but adjusted earnings fell 4% to $393 million due to

the end of an unspecified distribution deal.

"The best thing for WBD shareholders is that it is being

sold, because its fundamentals continue to deteriorate," wrote

Needham & Co senior research analyst Laura Martin.

Warner's stock was largely unchanged in early morning

trading.

Zaslav also highlighted the success of the Warner Bros film

slate, including "Wuthering Heights," "A Minecraft Movie" and

"Superman."

"We love the motion picture business," Zaslav said on the call.

"We at the company believe so deeply in the motion picture

business, putting movies on the screen for shared experience ...

Our commitment to the motion picture business is the core of our

company."

Netflix ( NFLX ) Chief Executive Ted Sarandos has defended his deal

for the studio and HBO by affirming his commitment to

releasing movies in theaters

, a strategy that was never part of Netflix's ( NFLX ) DNA.

Should Warner Bros board declare that Paramount's deal is

superior, Netflix ( NFLX ) has four business days to revise its offer.