Netflix Faces Mounting Pressure in Bidding War for Warner Bros. Discovery

Paramount Skydance raises bid for Warner Bros. Discovery to $31/share, pressuring Netflix. Investors worry about Netflix's potential $62B+ debt burden and suspended buybacks.

The strategic acquisition of Warner Bros. Discovery (WBD) is becoming a high-stakes gamble for Netflix. In a surprising move on Tuesday, rival bidder Paramount Skydance escalated the contest by raising its offer to $31 per share, placing significant pressure on the streaming leader. With investors already anxious over a potential debt burden, the central question now is whether Netflix will be forced to submit a more expensive counterbid or risk losing a deal of critical importance.

Financial Strain Weighs on Investor Sentiment

Market uncertainty is taking a toll on Netflix's share price. The equity has shed approximately 40% of its value since its peak in June 2025 and is currently trading near its 52-week low at around $77. For the current year 2026 alone, the stock is down roughly 19%.

The core concern for investors revolves around financing. To fund its original proposal, Netflix would need to assume approximately $52 billion in new debt while also absorbing WBD's net debt of $10.7 billion. A protracted bidding contest threatens to inflate this financial burden further—a prospect that is clearly unsettling the market.

Paramount's Superior Offer Challenges Netflix

The board of Warner Bros. Discovery indicated yesterday that it could classify Paramount Skydance's revised bid as a "superior proposal." The competing offer not only surpasses the previous $30 per share price but also includes attractive terms: Paramount would cover the $2.8 billion breakup fee WBD would owe Netflix if their deal collapses. An additional fee for transaction delays has also been proposed.

Should the WBD board formally favor Paramount's terms, the existing agreement grants Netflix a mere four business days to formulate a counteroffer. Netflix has so far declined to comment, but its shares exhibited volatile movement in after-hours trading following the news.

Strong Fundamentals Contrast with Costly Outlook

Operationally, Netflix continues to demonstrate resilience. Fourth-quarter 2025 revenue grew by nearly 18% to $12.05 billion, while the global subscriber base climbed to over 325 million. The advertising-supported tier showed particularly strong growth.

However, the outlook for 2026 tempers optimism. The company's operating margin is expected to be impacted by approximately $275 million in costs related to the proposed acquisition. Furthermore, management has suspended share repurchases to preserve liquidity for the pending transaction, removing a key support mechanism for the stock.

Political Considerations Add Another Layer of Complexity

The takeover battle is acquiring a political dimension. While Netflix Co-CEO Ted Sarandos has emphasized the transaction is purely business, reports suggest he plans to hold discussions at the White House. These talks are reportedly linked to political concerns regarding board composition. The competition is also engaged on this front; Paramount CEO David Ellison has recently sought political connections as well.

A final decision is expected by March 20, when WBD shareholders are scheduled to vote on the deal. For investors, the outcome now hinges on Netflix's willingness to engage in an even more costly bidding war and on how antitrust regulators will assess the rapidly shifting competitive landscape.