Warner Bros. Discovery (WBD) just dropped its fourth-quarter report card, and it reads like a classic tale of two media businesses. On one hand, streaming is growing like a weed. On the other, the old TV business is wilting on the vine. And hovering over it all is a massive, multi-billion dollar tug-of-war for who gets to own the whole thing.

The company reported quarterly revenue of $9.46 billion. That was down 7% from a year ago if you strip out currency effects, but it still managed to top analyst expectations of $9.31 billion. The bottom line, however, wasn't as pretty. Warner lost 10 cents per share, which was wider than the 1-cent loss Wall Street was anticipating. The good news? The overall net loss actually improved, shrinking to $252 million from $494 million a year ago.

Digging into the details shows where the pain and gain really are. The company's adjusted EBITDA—a measure of core profitability—fell 20% to $2.22 billion. The main culprit? The old-school TV business, officially called the Global Linear Networks segment, is in a steep decline.

The Great Unbundling Continues

Let's talk about the elephant in the room: linear TV is dying. Distribution revenue, which is largely the fees from cable and satellite companies, fell 3%. Why? Because solid growth in streaming subscribers couldn't make up for people continuing to cut the cord on traditional pay-TV. Advertising revenue fell 9%, again hurt by shrinking linear TV audiences. The company also noted that not having the NBA this quarter didn't help, knocking about 4% off the year-over-year growth rate.

Content revenue, which includes licensing shows and movies, fell 10%, mostly due to the timing of when deals get renewed. All this added up to a significant squeeze on cash. Operating cash flow dropped 34% to $1.80 billion, and free cash flow—the money left over after essential spending—plunged 43% to $1.38 billion. The company ended the quarter with $4.57 billion in cash.

The Streaming Engine Is Running, But Is It Profitable?

Now for the bright spot. The streaming business, home to HBO Max, is adding subscribers at a healthy clip. The company ended December with 131.6 million streaming customers. That's up from 116.9 million a year ago and 128.0 million just last quarter.

Streaming revenue overall rose 4% to $2.79 billion. Distribution revenue within streaming was up 2%, driven by that 13% jump in subscribers. Advertising revenue in streaming soared 17%, thanks to more people signing up for cheaper, ad-supported plans.

But here's the catch: while they're adding more users, they're making less money on each one. Global streaming Average Revenue Per User (ARPU) fell 9% to just $6.80. A big reason was an 11% drop in domestic ARPU to $10.45, coupled with growth in international markets where people pay less. The company pointed to the impact of renewing a big domestic distribution deal as a key factor in the domestic ARPU decline. Adjusted EBITDA for the streaming segment was essentially flat at $393 million, compared to $409 million a year ago.

The Rest of the Empire

The Studios segment, which makes movies and games, had a rough quarter too. Revenue fell 14% to $3.18 billion. Theatrical revenue was down 11% because, well, they didn't really release any major movies during the period. Games revenue fell a steep 34%, partly because last year's quarter had a strong carryover from a hit title. Profitability here took a hit, with adjusted EBITDA falling to $728 million from $950 million.

Then there's the Global Linear Networks segment—the traditional TV networks. This is where the decline is most stark. Revenue cratered 13% to $4.2 billion. Distribution revenue fell 8%, driven by a 10% drop in domestic pay-TV subscribers. Advertising revenue fell 14%, hurt by a 22% decline in audience for domestic networks and, again, the lack of NBA games.

The $108 Billion Question

Perhaps the most explosive part of the earnings report wasn't in the numbers, but in the commentary from CEO David Zaslav. He revealed that the company has been in talks with four different bidders. The process has gotten so competitive that there have been eight separate price increases since the first offer came in last September. The value on the table is now 63% higher than that initial bid.

The fight is between streaming giant Netflix (NFLX) and the combined entity of Paramount Skydance (PSKY). The story, as told during the call, is that Warner Bros. Discovery was leaning toward accepting Netflix's offer of $82.7 billion. In response, Paramount Skydance—backed by Larry Ellison and run by his son David—came in with a hostile, full-portfolio bid worth a staggering $108 billion. They're now directly appealing to Warner's shareholders to sell.

It’s a high-stakes drama fitting for Hollywood. One company is trying to navigate the painful transition from cable cash cow to streaming contender, all while potential suitors circle with checkbooks open, seeing value where current management sees challenge.