Shares of Netflix traded higher during Thursday's session, building on substantial gains from the prior day as the market digests a rapidly evolving takeover contest for key assets of Warner Bros Discovery. The streaming giant's stock climbed approximately 1.3% to $83.75 by late morning, following a near 6% surge on Wednesday that refocused investor attention on deal dynamics.
A High-Stakes Bidding War
The central drama involves Netflix's $82.7 billion offer to acquire Warner's studio and streaming operations, which breaks down to $27.75 per share. This proposal, however, faces a formidable challenge from Paramount Skydance, which has submitted a competing bid of $31 per share for the entire company. Paramount has significantly raised the stakes by attaching a $7 billion breakup fee to its latest offer and imposing a stricter deadline. The terms also include a provision for Warner shareholders to receive 25 cents per share for each quarter beyond September 30th that the transaction remains unclosed.
Warner's board has not yet declared the Paramount proposal superior. Should it do so, Netflix would have a four-business-day window to revise its own offer. Analysts note the subjective nature of determining a "better" deal, with considerations extending beyond pure price to include strategic fit and regulatory risk.
Political and Regulatory Headwinds Intensify
The proposed consolidation is attracting significant political and antitrust scrutiny. Netflix co-CEO Ted Sarandos is scheduled to meet with White House officials on Thursday, with discussions expected to cover the Warner bid alongside other matters. Concurrently, a coalition of eleven Republican state attorneys general has formally urged the U.S. Department of Justice to investigate the potential Netflix-Warner merger. Their petition warns that the deal could lead to excessive market concentration, potentially harming consumers through higher prices and reduced innovation.
This regulatory overhang introduces substantial uncertainty. Any move by the DOJ to block or delay the transaction, or a decision by Warner to accept Paramount's rival bid, could force Netflix to either increase its offer price or withdraw entirely—either scenario likely triggering significant stock price volatility.
Warner's Mixed Quarterly Results
Adding complexity to the situation, Warner Bros Discovery reported quarterly financial results that highlighted both challenges and strengths. Total revenue declined 6% year-over-year to just under $9.5 billion, reflecting ongoing pressures in traditional television and a subdued performance from its film and TV studio divisions. A bright spot emerged in streaming, where the HBO Max service added 3.5 million net new subscribers, boosting its global total to 131.6 million.
For its part, Paramount is positioning its bid as a strategic "accelerant" for its own ambitions, even as its traditional TV business erodes. The company provided a first-quarter revenue outlook ranging between $7.15 billion and $7.35 billion, slightly below Wall Street's expectations.
Market Context and Path Forward
The recent rebound in Netflix's share price is not without risk. The outcome now appears binary: either the company commits significant capital to secure Warner's assets, or it steps back to preserve its balance sheet. This critical decision could be made within days. Market observers are closely watching Sarandos's discussions in Washington for any signals regarding antitrust enforcement attitudes.
The process moves toward a climax with a special meeting of Warner shareholders scheduled for March 20, where they will vote on the Netflix merger agreement. The interplay between competitive offers, regulatory concerns, and underlying business performance at Warner ensures that the coming weeks will be decisive for the future landscape of the media and streaming industry.
