I have a post on $Netflix(NFLX)$ after it was announced that they have won the bid to buy Warner Bros. Click here ! for the details and help to Repost so more people will know ok, tks!
It was supposed to have been out on Mon, 08 Dec 2025 but review team was allegedly so busy, they did not do their job, it until Tuesday.
Much have taken place since composing original post on Sunday.
For a start, NFLX stock price continued to pullback as investors weren’t keen with the company buying Warner Bros; despite the extensive catalog of intellectual property (IPs) owned by the media giant.
On Mon, 08 Dec 2025, NFLX fell (again) by -3.44% to close at $96.79 per share. (see below)
In fact, the giant streamer has been consolidating since its stock split as of Fri, 14 Nov 2025.
Post split, when it resumed trading on Mon, 17 Nov 2025, it opened lower at $110.29 vs Friday’s split price of $111.22 (see above)
NFLX also closed lower last Fri, 05 Dec 2025 after news broke that Warner Bros has accepted its bid over and above PSKY’s triple bids within a calendar month.
Investors’ Concerns & Nervousness.
Investors’ concerns are ‘genuine’ if I look at the deal from the following viewpoints.
(1) 💰 WB’s Deal & Price Tag.
-
Netflix announced the acquisition of Warner Bros.' film and TV studio business for $$72 billion.
-
This price is notably high, because the entire $Warner Bros. Discovery(WBD)$ market cap was just over $30 billion.
-
It is a massive move for Netflix, whose prior largest acquisition was only $700 million.
-
Most of the payment will be in cash, representing a large outlay for NFLX with approximately $9 billion in annual free cash flow (FCF).
(2) 🔄 Strategic Shift & Business Model Risk
-
The acquisition signals a major shift: from streaming pure-play to become a full-bore Hollywood studio.
-
It means NFLX would be running the part of Warner Bros. that produce content (movies) for theaters and other competing networks/streamers.
-
This reverses NFLX’s years of only producing for its own platform.
-
It forces Netflix to engage in public and costly theatrical release business, something it has historically dismissed. ‘Worse’, these activities will add to its operations costs.
Above changes & risks (significant and inherent in the deal) resulted in investors’ concerns and the stock’s falling trend of late.
NFLX has slipped nearly -3% on the announcement, adding to a prior -17% drop since late October 2025, when rumors of the bid began. (see above)
To be fair, despite the mentioned risks, FNLX has a track record of successful business shifts (DVDs to streaming, exclusive content, adding ad and sharing tiers).
Statistically, it still holds a huge market cap of over $425 billion.
Co-CEO Greg Peters defended the acquisition, arguing that past “media-merger” failed because buyers do not understand the entertainment business. NFLX asserted that they understand what they are buying into.
Other Roadblocks & More …
Immediate foreseeable challenges that NFLX will need to handle includes:
-
Content Licensing: If Netflix stops licensing Warner content to other streamers, it will cause strong backlash.
-
Pricing: Combining NFLX and HBO could lead to significant price hikes, fueling antitrust scrutiny.
-
Theatrical Commitment: Co-CEO Ted Sarandos repeated that NFLX’s main goal is to release new movies on its platform first, but reducing Warner’s usual number of theater releases could upset many people in Hollywood’s creative community.
-
Regulatory Approval: This is the biggest challenge facing NFLX because US regulators are already concerned about NFLX's dominance. The $5.8 billion termination fee (if the deal falls through) is one of the largest ever, reflecting the high stakes, "highly politicized deal process."
-
If the deal does not go through because of antitrust laws or foreign regulatory laws, NFLX has to give Warner Bros. $5.8 billion, one of the largest ever, reflecting the high-stakes, highly politicized deal process.
Busy Body Waded In.
As if regulatory scrutiny and NFLX’s negotiation with Warner-Bros isn’t complicated enough, Trump has announced on Sun, 07 Dec 2025 that he would be "involved in the decision" and pointed to possible antitrust issues implied by the NFLX deal.
Doesn’t the president have more important national-level matters on hand to manage ie. US economy, falling jobs, creeping inflation etc… instead of a personal crusade ?
His involvement is “personal” because his good friend - Larry Ellison is father of $Paramount Skydance Corp(PSKY)$ CEO David Ellison; who failed to gain WBD board of directors’ trust.
Despite losing the bidding war, PSKY has turned rogue and mounted a takeover bid of WBD.
On Mon, 08 Dec 2025, PSKY escalating its fight for the entertainment company, by bringing its case directly to WBD shareholders. (see below)
PSKY’s offer on the table is an all-cash bid of $30 per share vs NFLX’s board-approved $27.75 cash & NFLX stock offer.
NFLX’s deal - with partial NFLX stocks thrown in, overall value hovers around $30.50. What is strange is No mainstream media reported this breakdown in details. Conspiracy ?
PSKY’s $108.4 billion bid is for WBD’s entire business, unlike NFLX’s deal that excluded Global Networks cable business.
This also means PSKY is paying only $2.25 for Global Networks Cable that includes (1) Cable News Network (CNN), (2) TNT Sports, (3) Discovery networks, (4) Discovery+ streaming service, (5) Bleacher Report and (6) top free-to-air channels across Europe.
Analysts have valued Global Networks Cable to worth at least $4 per share.
There you have it, David Ellison is a shrewd businessman, in fact - stingy.
Ellison claimed WBD's board did not meaningfully engaged with its 6 private proposals and chose the inferior NFLX deal, prompting PSKY to go directly to WBD shareholders with a tender offer.
It is clear (now) why WBD’s board of director did not select PSKY’s insincere proposal - isn’t it.
Additionally, PSKY has argued its deal would face less regulatory scrutiny, thanks to his father close association with the president, who is going out on a limb to help out a friend.
By going hostile, PSKY is trying to pressure shareholders to reject WBD’s board‑backed NFLX deal, claiming (a) the board undervalued WBD and (b) favored NFLX in an unfair sale process.
What Now ?
WBD must now decide whether to:
-
Stick with the approved NFLX deal.
-
Pay a breakup fee of $2.8 billion, to switch.
-
Let shareholders choose by tendering into PSKY’s offer.
Final Take.
Hypothetically, if NFLX emerges as the ultimate winner in the bidding war, all “headwind” questions will likely hang over it, well into 2026.
New Street Research, Partners, Dan Salmon feels the questions NFLX need to address :
-
Whether the opportunity is worthy of moving so significantly from building content to buying.
-
The considerable investment of management time and financial resources.
-
Risks of a prolonged, likely and highly politicized deal process.
As a result, he has cut NFLX’s price target by -17%, following Fri, 05 Dec 2025 NFLX’s deal announcement.
This works out to be -$17.04 from closing price $100.24, making the revised price target to be $83.20 per share.
WBD Stock Movement.
While the bidding war continues to play out, the clear winner is WBD.
It has finally made a modest gain, after 3 years & 9 months. (see below)
Warner Bros Discovery was forged on 8 Apr 2022, from the merger of:
-
Warner Bros. (WarnerMedia, that was spun off by $AT&T Inc(T)$).
-
Discovery, Inc.
-
On 11 Apr 2022, WBD opened at $24.08 per share.
-
Since then, it began to trend lower and lower, with a 52-week low of $7.52, in April 2025 - courtesy of Trump tariffs.
-
It exhibited a serious mount from mid-September 2025 onwards at around $19 per share and has never looked back since.
NFLX may have won the streaming war, but taking over Warner Bros is a whole new battle that will likely leave fresh wounds ? Will it, what do you think ?
Due to creative differences and bias, I will scale back my posting.
My 2,430 ‘timeless’ posts remain available (for now) for those who value fundamentals as Mr Buffett had pointed — invest in businesses, not pick stocks.
To new subscribers, no flashy screens to entice blind investing. I aim to share on how to fish, not fish for you.
I’m grateful to share what I know. In the alternate moo moo universe, where I am valued & appreciated, I will still be sharing. Good luck on your i-journey.
Remember to check out my other posts. (See below). Help to Repost ok, Thanks.
Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.
-
Do you think PSKY has a bias advantage going into its hostile bid for WBD ?
-
Do you think, NFLX & WBD’s board of directors will vote “in favour” and seal NFLX’s fate ?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Comments
Worth reading