A Pivotal Week for Netflix as Acquisition Deadline Looms

Warner Bros. Discovery's exclusive talks with Paramount end as Netflix awaits a final bid. The WBD board still backs the Netflix deal, but a higher offer could change the game.

The coming days are set to be decisive for Netflix, with a critical deadline expiring today, Monday. This marks the end of a seven-day negotiation window granted to Warner Bros. Discovery (WBD), allowing the streaming conglomerate to engage in talks with rival bidder Paramount Skydance. The development follows Paramount's announcement on Friday that it had successfully navigated an antitrust review by the U.S. Department of Justice. Netflix shares reacted positively to that news, closing Friday's session at $78.67, a gain of 2.17%.

Conflicting Interpretations of Regulatory Hurdles

Paramount stated that a mandatory ten-day waiting period had concluded after it responded to a second request for information from the Justice Department on February 19. The company framed this as a regulatory green light, asserting there was "no longer a legal obstacle in the U.S. to completing" its proposed acquisition of WBD.

Netflix's chief legal officer, David Hyman, issued a sharp rebuttal. He accused Paramount Skydance of continuing to "mislead shareholders and distract from the facts," clarifying that routine antitrust milestones do not equate to formal approval or a final decision from the Justice Department. Hyman emphasized that Paramount had "not secured the required approvals and are far from doing so." Legally, the expiration of the waiting period does not constitute a final clearance, as the DOJ retains the authority to continue its investigation and potentially file a lawsuit to block the transaction even after the deadline.

The Stakes of Today's Expiring Window

On February 17, Netflix granted WBD a narrowly defined waiver, valid until today, permitting it to negotiate with Paramount Skydance. The purpose of this limited period is for Paramount to present its "best and final" offer and address specific "deficiencies" identified by WBD's board of directors.

Reports indicate that a senior Paramount representative expressed willingness to increase its current offer from $30 to $31 per share merely to re-enter discussions. This contrasts with Netflix's already-signed agreement to pay $27.75 per share in cash for WBD's streaming and studio divisions, which include HBO Max, HBO, and Warner Bros. film and television studios.

A key provision is Netflix's matching right, which remains in effect after the deadline passes. Co-CEO Ted Sarandos explained on February 17 that the waiver was designed to provide WBD shareholders with "complete clarity and certainty," allowing Paramount to make a move before Netflix makes its final decision.

WBD Board Maintains Support for Netflix Deal

Despite the ongoing parallel discussions with Paramount, the WBD board has unanimously recommended the transaction with Netflix. On February 17, WBD filed its definitive proxy statement and scheduled a special shareholder meeting for March 20, 2026, where investors will vote on the Netflix merger.

The board underscored that the Netflix proposal delivers "superior value for our shareholders" and carries "virtually no financing risk." It simultaneously voiced concerns regarding Paramount's financing structure, noting that a combined Paramount-WBD entity would carry approximately $84 billion in total debt—a setup Netflix has labeled "the largest proposed leveraged buyout in history."

Share Price Reflects Investor Apprehension

Netflix's stock has faced significant pressure since the WBD acquisition was announced in December 2025. It hit a 52-week low of $75.23 on February 12. Since the start of the year, the share price has declined roughly 14% from around $91, reflecting investor anxiety over the financial burden of the potential deal.

To preserve liquidity for the transaction, Netflix has suspended its share repurchase program. In its fourth-quarter 2025 shareholder letter dated January 20, the company reported full-year 2025 revenue of $45.2 billion, a 16% increase. Its operating margin stood at 29.5%. For 2026, Netflix provided revenue guidance between $50.7 and $51.7 billion, with a target margin of 31.5%.

Regulatory Scrutiny and the Path Forward

The outcome of today's deadline will set the stage for the weeks ahead. If Paramount presents a binding, superior offer, Netflix can exercise its matching right. Should Paramount fail to adequately address the WBD board's concerns, the path would be cleared for the shareholder vote on March 20.

Both proposed transactions remain under intense scrutiny from multiple regulatory bodies, including the U.S. Department of Justice, the European Commission, and the UK's Competition and Markets Authority. Furthermore, on February 20, the California Attorney General announced an intention to "closely examine" both merger plans.