Exclusive: Netflix has ample room to increase its offer in battle for Warner Bros, sources say | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]A drone view shows the Netflix logo on one of the company's buildings in the Hollywood neighborhood in Los Angeles, California, U.S., January 20, 2026. REUTERS/Daniel Cole/File Photo [Purchase Licensing Rights, opens new tab]Feb 19 (Reuters) - Netflix [(NFLX.O), opens new tab] has ample cash ...

Warner Bros Discovery (WBD) has reopened talks with Paramount Skydance, giving the company seven days to table its best and final offer and top an existing agreement with Netflix.WBD has so far stuck to its binding agreement with Netflix and rejected a series of sweetened offers from Paramount, resulting in the company pursuing a hostile $108.4bn (£76.8bn) takeover directly with shareholdersLast week, WBD said that a senior representative for Paramount had informally told a board member that it would raise ...

Warner Bros. Studio in Burbank. The closely watched sale of the century-old studio is expected to reshape Hollywood. (Myung J. Chun / Los Angeles Times) Warner Bros. Discovery is cracking open the door to allow spurned bidder, Paramount Skydance, to make its case that it should win the legendary entertainment company — the latest twist in the contentious, high-stakes auction. Warner's decision to reopen talks comes after weeks of pressure from Paramount and its controlling shareholder, scion David Elliso ...

Core Viewpoint - Warner Bros Discovery is contemplating reopening sale discussions with Paramount Skydance following an amended offer from Paramount, which may present a more favorable deal compared to the current agreement with Netflix [1][4]. Group 1: Offer Details - Paramount has enhanced its bid for Warner Bros by proposing a 25-cent-per-share quarterly "ticking fee," amounting to approximately $650 million, starting in 2027 until the deal closes [5]. - Paramount has also agreed to cover Warner Bros' $2.8 billion breakup fee to Netflix if Warner Bros decides to withdraw from the Netflix deal [5][7]. - Despite these enhancements, Paramount has not increased its initial offer of $30 per share, which values the deal at $108.4 billion, including debt [5]. Group 2: Strategic Interests - Both Netflix and Paramount are interested in acquiring Warner Bros due to its prominent film and television studios, extensive content library, and major franchises such as "Game of Thrones," "Harry Potter," and DC Comics superheroes [6]. - Activist investor Ancora Holdings, holding a stake of nearly $200 million, has expressed intentions to oppose the Netflix deal, claiming that Warner Bros' board did not adequately engage with Paramount regarding its competing bid [6].

Core Viewpoint - Activist investor Ancora Holdings has acquired a stake in Warner Bros Discovery and intends to oppose the company's deal with Netflix, citing inadequate engagement with Paramount Skydance regarding a rival offer for the entire company [1][2]. Group 1: Stake and Opposition - Ancora Holdings has built a stake in Warner Bros worth nearly $200 million, representing less than 1% of the company's outstanding shares [4]. - The investor plans to vote against the Netflix deal at an upcoming shareholder meeting unless Warner Bros reverses its recommendation in favor of the acquisition [2]. Group 2: Value Comparison - Ancora argues that the proposed Netflix-Warner Bros deal offers inferior value and carries significant regulatory risks, while a competing offer from Paramount provides a clearer path to approval and a higher value of $30 per share [3][6]. - Paramount's bid, valued at $108.4 billion including debt, has not been increased, but it offers additional cash incentives to Warner Bros investors for delays in closing the deal [5][6]. Group 3: Strategic Moves - Paramount has extended its tender offer deadline to February 20 to persuade investors and has committed to covering the $2.8 billion breakup fee if Warner Bros withdraws from the Netflix deal [5][7]. - Analysts suggest that Paramount may need to raise its offer to reignite deal discussions, but Ancora believes the improved offer qualifies as a superior proposal under the Netflix agreement [7].

Core Viewpoint - The acquisition of Warner Bros. by Netflix marks a significant shift in the streaming industry, potentially disrupting Hollywood and consolidating major franchises under one platform [2][3]. Group 1: Acquisition Details - Netflix has acquired Warner Bros.' film and television studios, HBO, HBO Max, and other assets, bringing together iconic franchises like Game of Thrones and Harry Potter [2]. - The deal is valued at approximately $82.7 billion, with Netflix offering $27.75 per WBD share in an all-cash agreement [9][10]. - Paramount had initially offered around $108 billion to acquire the entire company, but Netflix's focused offer on specific assets was deemed more attractive by WBD's board [8]. Group 2: Competitive Bidding Process - The bidding process for WBD became competitive, with Paramount and Comcast emerging as serious contenders, but Netflix ultimately secured the deal [6][8]. - Paramount's proposal was rejected due to concerns about its heavy debt load, which would have left the combined company with $87 billion in debt [12]. - Paramount has continued to pursue WBD's assets, even filing a lawsuit for more information about the Netflix deal [13]. Group 3: Regulatory Scrutiny - The deal faces intense regulatory scrutiny, with Netflix co-CEO Ted Sarandos scheduled to testify before a U.S. Senate committee [15]. - Prominent lawmakers have expressed concerns that the merger could lead to excessive market power, potentially harming consumers and stifling competition [16]. - If regulators block the acquisition, Netflix would be liable for a $5.8 billion breakup fee [17]. Group 4: Industry Reactions - The entertainment industry has largely reacted negatively, with the Writers Guild of America calling for the merger to be blocked on antitrust grounds [19]. - Concerns have been raised about the potential impact on independent creators and job losses within the industry [19]. - Netflix has indicated that operations at HBO will remain largely unchanged in the near term, with no immediate pricing changes expected during the regulatory approval period [21][22]. Group 5: Timeline for Closure - The deal is not yet finalized, with a WBD stockholder vote expected around April, and the acquisition anticipated to close 12 to 18 months after that vote, pending regulatory approvals [23].

Group 1 - Paramount Skydance has increased its bid for Warner Bros Discovery to $30 per share, offering additional cash for delays and agreeing to cover the breakup fee owed to Netflix if the deal fails [1][2] - The "ticking fee" of 25 cents per share will amount to approximately $650 million in cash for each quarter from January 1, 2027, until the deal is finalized [1] - Paramount will also cover the $2.8 billion termination fee that Warner Bros Discovery would owe Netflix if the acquisition does not proceed [2] Group 2 - Paramount is actively campaigning to persuade shareholders that its bid is more favorable, despite Warner Bros Discovery rejecting the offer [3] - Warner Bros Discovery plans to hold a special investor meeting to vote on the Netflix deal, which is expected to occur by April [3]

Core Insights - Netflix reported solid earnings with Q4 revenue exceeding $12 billion, an 18% increase year-over-year, and earnings per share of $0.56, slightly above Wall Street projections. However, the stock dropped due to management's forecast of slower revenue growth for 2026, projecting a growth rate of 12-14% compared to 16% in 2025 [2][3][10] Financial Performance - Q4 revenue was over $12 billion, up 18% from the previous year [2] - Earnings per share stood at $0.56, slightly above expectations [2] - The company reached approximately 325 million global paid memberships, adding 23 million subscribers in 2025 [2][3] Growth Outlook - Management anticipates a revenue growth rate of 12-14% for 2026, a decrease from 16% in 2025 [2][7] - The ad business is growing significantly, with ad sales expected to double in 2026 from $1.5 billion in 2025 [6][7] - The company is transitioning into a more mature phase, focusing on sustaining its business rather than hypergrowth [3][4] Strategic Moves - Netflix amended its bid for Warner Brothers Discovery to an all-cash offer of $27.75 per share, valuing the deal at approximately $72 billion, or $83 billion including debt [9][10] - The acquisition aims to secure a vast content library, enhancing Netflix's competitive position in the streaming market [10][15] - The all-cash structure is designed to provide immediate value to Warner Brothers shareholders and reduce stock price volatility [10] Debt and Financing - Netflix's debt is projected to increase from $34 billion to $42 billion to finance the acquisition, raising concerns about financial flexibility [10][11] - The company had $15.8 billion in debt at the end of 2020, which has been decreasing as it used debt to acquire content [11] - Management believes they can handle the increased debt and maintain cash flow, indicating confidence in long-term financial stability [11][12] Market Position - Netflix is recognized as the leader in streaming, but faces increased competition from platforms like YouTube, which is gaining market share [4][6] - The company is adapting to a more mature business model, focusing on content acquisition and strategic investments rather than rapid growth [3][4] - The acquisition of Warner Brothers Discovery is seen as a critical move to bolster Netflix's content offerings and market power [15]

Core Viewpoint - Netflix co-CEO Greg Peters criticized Paramount Skydance's $108 billion hostile bid for Warner Bros. Discovery, deeming it unrealistic without financial backing from Oracle's Larry Ellison [1][2]. Group 1: Bid Analysis - Paramount's proposal is heavily reliant on debt and external support, making it riskier compared to Netflix's all-cash offer of $82.7 billion for Warner Bros.' film and television studios [3]. - Peters described the additional leverage required for Paramount's bid as "pretty crazy" [4]. Group 2: Shareholder Support - Paramount has approached Warner Bros. Discovery shareholders directly after the board rejected its bid, but has only secured about 7% of shares, which is insufficient for control [4]. Group 3: Industry Impact - A potential merger between Netflix and Warner Bros. would significantly alter Hollywood, combining major franchises like "Game of Thrones" and "Harry Potter" with Netflix's popular series [5]. - Concerns have been raised among filmmakers, unions, and theater owners regarding Netflix's influence on theatrical releases [5]. Group 4: Regulatory Considerations - Netflix has committed to honoring Warner Bros.' typical 45-day theatrical window, addressing concerns about undermining cinemas [6]. - Regulatory scrutiny from U.S. and European authorities is anticipated for both Netflix's and Paramount's bids [6]. Group 5: Competitive Landscape - Peters emphasized that Netflix competes with a wide array of players, including YouTube, Amazon, and Apple, noting that Netflix accounts for less than 10% of TV viewing hours in most markets [7].

Core Insights - Netflix has acquired Warner Bros. Discovery's film and television studios, including HBO and HBO Max, consolidating major franchises like Game of Thrones and Harry Potter under its platform [2][3] - The deal, valued at approximately $82.7 billion, is expected to significantly disrupt the Hollywood landscape and reshape the streaming industry [3][7] Company Developments - Warner Bros. Discovery (WBD) was exploring a potential sale due to financial struggles, including billions in debt and declining cable viewership [4][5] - The bidding process attracted several major players, with Paramount initially seen as a frontrunner before Netflix's offer was deemed more attractive by WBD's board [6] Financial Aspects - Netflix's final offer was an all-cash deal at $27.75 per WBD share, which reassured investors and facilitated the deal's progression [7] - Paramount's bid of approximately $108 billion aimed to acquire the entire company but was rejected due to concerns over its heavy debt load, which would have resulted in a combined debt of $87 billion [6][9]