As Paramount Skydance's bid for Warner Bros. Discovery stretches into the stratosphere, a painful truth emerged.

Paramount's core television business, which includes CBS, Comedy Central and MTV, is rapidly shrinking and its Melrose Avenue movie studio lost money. Paramount this week reported a $339-million operating loss in last year's fourth quarter, which included a half-billion dollars in restructuring costs following Paramount's August takeover by David Ellison's Skydance Media.

That performance underscores why Paramount desperately wants Warner Bros. Discovery.

Paramount leaders have been ferociously fighting to push Netflix out of the pole position. Earlier this week, Paramount raised bid for Warner to $31 a share and it threw in other sweeteners for a proposed deal that would top $110 billion.

But on Thursday, Warner Bros. Discovery released its own gloomy fourth-quarter financial results.

Warner revenue declined 6% to $9.46 billion and the company recorded a $252 million loss.

Warner's HBO Max and Discovery+ streaming division notched growth — but not nearly enough to keep pace with the continued contraction of its traditional cable channels. Revenue for Warner's linear cable channels fell 12% to $4.2 billion.

The loss of TNT's NBA contract last year contributed to lower advertising revenue. Linear channels adjusted earnings before interest, taxes, depreciation, and amortization was down 27% to $1.4 billion.

Taking over Warner's historic studio in Burbank would give the Ellison-led Paramount a vast library of programming with Harry Potter, Batman and other DC Comics and television shows including "The Pitt," "The White Lotus," and "Abbott Elementary."

Paramount would gain more robust TV and movie production capabilities. Last year, for example, Paramount released just eight films.

On Thursday's call with analysts, Warner Bros. Discovery Chief Executive David Zaslav, who took over the company from AT&T nearly four years ago, touted Warner Bros.' string of successful releases, including "Sinners," "Weapons," and "A Minecraft Movie."

Warner films generated $4.4 billion in theatrical revenue in 2025.

"Our goal for Warner Bros. Discovery has been to make this great company the most innovative and exciting place to tell stories in the world," Zaslav said on the earnings call. "Looking at 2025, it's clear we fulfilled our ambition."

But despite the box office successes, revenue to Warner Bros. movie and TV studios dropped 13% to $3.2 billion. The studios adjusted earnings before interest, taxes, depreciation, and amortization dropped 23% to $728 million.

The company is still wrestling with the costs of its previous takeovers and resulting waves of reductions.

Warner's $252-million quarterly loss was a byproduct of a $1.3 billion write-down as Warner continues to amortize restructuring charges stemming from the 2022 merger with Zaslav's Discovery. Lower value of Warner's programming also factored in.

Warner has $33.5 billion in debt — another vestige of the 2022 merger, which led to thousands of job losses and dumped programming.

"We canceled a lot of movies and a lot of [TV] series when we first got here," Zaslav said. "We canceled a lot of stuff ... that we didn't think was going to be successful."

Thousands of entertainment workers also lost their jobs amid the reductions — adding to a troubling employment picture as film production slows in Los Angeles.

Warner's fourth-quarter loss of 10 cents a share was wider than analysts' estimates of a loss of 3 cents a share.

The earnings didn't dent Warner stock, which was trading at around $29 a share Thursday — buoyed by the bidding war between Netflix and Paramount. Last summer, Warner shares went for about $12.

"Our board continues to lead a rigorous, highly competitive and thorough sales process," Zaslav said, adding the company has held sale talks with four prospective buyers since Ellison launched the bidding for Warner in September.

The interest in the company has "led to eight price increases, and have thus far achieved a 63% increase in value versus the first offer received in September," Zaslav said. The process has been "delivering significant value for WBD shareholders."

Should Netflix or Paramount succeed in the bidding for Warner, the winner would face years of retrenchments and cost-cutting.

Acquiring Warner Bros. Discovery would saddle either company with more than $60 billion in debt.

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