Netflix Faces Intensifying Bidding War for Warner Bros. Discovery

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The streaming giant Netflix finds itself at the center of one of the media industry's most significant acquisition battles. Its proposed $82.7 billion purchase of Warner Bros. Discovery (WBD) is now being challenged by a competing, unsolicited offer from Paramount Skydance. Since the initial announcement in early December, Netflix's share price has declined as investors scrutinize the deal's financing, integration complexities, and prospects for success in this high-stakes contest.

The acquisition landscape grew considerably more complex on December 8th when Paramount Skydance initiated a hostile takeover bid for WBD. The offer of $30 per share is entirely in cash.

Paramount further intensified pressure on December 22nd by revising its proposal with several key concessions:
* A personal guarantee from Oracle co-founder Larry Ellison for $40.4 billion in equity financing.
* An increase in the break-up fee from $5.0 billion to $5.8 billion, bringing it in line with the fee in the Netflix agreement.
* An extension of the acceptance period for WBD shareholders until January 21, 2026.

Ellison's personal guarantee marks a significant escalation from the original structure, which was primarily backed by the Ellison Family Trust. Paramount also intends to release documentation showing the trust's ownership of approximately 1.16 billion Oracle shares.

Netflix Secures New $25 Billion Financing Package

In response to the competitive pressure, Netflix filed a new banking arrangement with the U.S. SEC on December 22nd. The $25 billion facility is designed to replace part of the existing $59 billion bridge financing commitment for the WBD acquisition.

The package consists of:
* A $5 billion unsecured revolving credit line.
* A $10 billion unsecured, callable term loan.
* An additional $10 billion unsecured, callable term loan.

This move aims to transition from short-term bridge financing to a more permanent and potentially lower-cost capital structure. Prior to this transaction, Netflix's long-term debt stood at approximately $14.5 billion. Successfully acquiring WBD would represent the largest takeover in entertainment industry history.

Key Terms of the Netflix-WBD Agreement

The deal between Netflix and Warner Bros. Discovery, announced on December 5th, is structured as follows:
* Enterprise Value: $82.7 billion
* Equity Value: $72.0 billion
* Offer Price: $27.75 per WBD share
* $23.25 in cash
* $4.50 in Netflix stock

A merger would bring iconic Warner Bros. Discovery content and franchises—including HBO, Game of Thrones, The Sopranos, Harry Potter, and the DC Universe—under the Netflix umbrella, joining original hits like Wednesday, Bridgerton, and Squid Game.

WBD Board Recommends Shareholders Back Netflix Deal

The Warner Bros. Discovery board of directors has advised its shareholders to reject the Paramount offer and support the agreement with Netflix. Netflix publicly welcomed this stance on December 17th.

In a letter to WBD shareholders, Netflix Co-CEOs Ted Sarandos and Greg Peters emphasized several advantages of their proposal:
* High financing certainty through committed credit lines from leading institutions.
* Progress in the regulatory process, including a filed HSR notification and discussions with the U.S. Department of Justice and the European Commission.
* No requirement for a review by the U.S. Committee on Foreign Investment (CFIUS) for Netflix's financing structure.
* Expected annual cost savings of $2 to $3 billion by the third year post-closing.

Netflix is thus arguing that its offer, despite a lower cash component per share, is structurally more reliable and promises greater long-term synergies than Paramount's all-cash proposal.

Market Reaction and Critical Path Forward

Netflix shares have fallen approximately 7% since the acquisition plans were unveiled on December 5th, trading around $93.50 as of yesterday's close. The volatility reflects investor tension between the potential for growth-enhancing expansion and the risks associated with a highly leveraged mega-deal.

Attention now turns to two pivotal upcoming events: the January 21st acceptance deadline for Paramount's offer and the ongoing regulatory scrutiny of the Netflix transaction in the U.S. and Europe. The ultimate decision for WBD shareholders will hinge on which package—weighing price, financing certainty, and regulatory approval probability—proves most convincing.