Forbesยท2025-10-21 22:35Core Viewpoint - Netflix is reportedly interested in acquiring Warner Bros. Discovery, which has officially put itself on the market, but the company's Co-CEOs indicated that major acquisitions are not a priority for them [2][3]. Financial Performance - Netflix experienced a revenue increase of 17% in Q3, but reported an earnings-per-share miss due to a complex tax dispute in Brazil, which affected operating margins, dropping them to 28% from a previously guided 31.5% [3][12]. - The company attributed the earnings miss to an unexpected tax issue with Brazilian authorities, which involves back payments related to technology usage fees [12][13]. Acquisition Interest - Co-CEO Ted Sarandos stated that Netflix has no interest in owning legacy media networks and emphasized the need for acquisitions to strengthen existing capabilities or accelerate strategy [3][4]. - Analysts express skepticism about the strategic fit of Warner Bros. assets for Netflix, suggesting that most of these assets do not align with Netflix's corporate priorities [8][9]. Market Dynamics - The current consolidation in Hollywood is viewed as not fundamentally changing the competitive landscape, with previous mergers yielding varied outcomes [5][6]. - Analysts noted that acquiring another company may not help Netflix develop the necessary capabilities to compete globally in streaming video [5][10]. Future Growth Strategies - Netflix's growth is expected to come from its ad-supported tier, which has doubled revenues from the previous year, and from investments in live events and sports [14][15]. - The company is cautious about entering into expensive long-term broadcasting deals, unlike traditional media companies [15].