Escalating Bidding War Puts Pressure on Netflix’s Acquisition Strategy

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The competitive landscape for media acquisitions intensified this week, placing Netflix under significant pressure. As the streaming giant finalizes billions in debt to fund its proposed purchase of Warner Bros. Discovery, a rival bid from Paramount Skydance has gained formidable financial backing from tech billionaire Larry Ellison. Investor concerns over a costly bidding contest were reflected in Netflix's share price, which declined in yesterday's trading session.

The primary challenge to Netflix's plans emerged from its competitor. Paramount Skydance has revised its unsolicited all-cash offer, presenting a powerful new advantage: Oracle founder Larry Ellison has personally guaranteed $40.4 billion of the required equity financing.

This strategic move directly addresses previous Warner Bros. Discovery board concerns regarding the certainty of the competing bid's funding. Paramount's improved proposal of $30 per share in cash now substantially exceeds the value of Netflix's mixed cash-and-stock offer, which is valued at approximately $27.75 per share. Furthermore, Paramount has matched the $5.8 billion "reverse termination fee," the penalty payable if the deal fails to close.

Netflix Secures Financing, Amid Investor Caution

To facilitate the proposed $82.7 billion transaction, Netflix has reconfigured its financing structure. According to documents dated December 22, the company is replacing portions of an initial bridge loan with longer-term debt obligations. The new package includes a $5 billion revolving credit facility alongside term loans totaling $20 billion, with maturities ranging from two to three years.

While this provides management with certainty for the complex acquisition, the market response has been cautious. The clarification of this substantial debt burden contributed to a 1.2% drop in the company's stock price yesterday, to $93.23. Approximately $34 billion remains as a bridge loan that still must be placed in the market.

Market Anticipates January Decision and Regulatory Hurdles

The financial markets are already pricing in the increased risk of a protracted takeover battle. As Netflix shares retreated, shares of the acquisition target, Warner Bros. Discovery, climbed 3% on speculation of an even higher final offer.

Time is a critical factor. The deadline for Paramount's revised bid is January 21, 2026. Although Warner's management currently recommends the merger with Netflix, Ellison's guaranteed cash offer places considerable pressure on shareholders to reconsider that position. Regardless of the eventual victor, lengthy antitrust reviews and the required divestiture of linear TV networks lie ahead, making it unlikely any transaction will conclude before the third quarter of 2026.