The contest to acquire Warner Bros Discovery (WBD) is reaching a pivotal moment, with Netflix positioned at the heart of the negotiations. In a significant development, the WBD board of directors has firmly rejected a rival bid from Paramount Skydance while throwing its support behind a competing merger proposal from the streaming giant. This move substantially increases the likelihood that Netflix will expand its footprint in the global media landscape.
Market Analysts Weigh In on Strategic Shift
Financial markets are closely monitoring Netflix’s central role in the ongoing media sector consolidation. Following the board’s recommendation and the release of Q3 earnings, several investment banks have updated their assessments.
Key analyst actions and financial data from December 18 include:
- Jefferies: Analyst James Heaney reaffirmed a “Buy” rating with a $134 price target, citing the company’s robust market position.
- Morgan Stanley: The firm reduced its price target from $150 to $120 but maintained an “Overweight” rating, indicating continued confidence in the stock’s potential despite adjusted expectations.
- Q3 Revenue: Netflix reported third-quarter revenue of $11.64 billion.
- Recent Trading: Netflix shares closed at $94.79 on December 17. This price reflects the 10-for-1 stock split executed in November.
Board Rejects Paramount, Endorses Netflix
On December 17 and 18, the WBD board unanimously dismissed Paramount Skydance’s $108.4 billion offer, labeling it “inadequate and illusory.” Although Paramount nominally offered $30 per WBD share, the leadership highlighted substantial financial risks.
The board’s primary criticisms centered on:
* The absence of a personal guarantee from Oracle founder Larry Ellison.
* A deal structure involving an “opaque revocable trust.”
* A perceived lack of transaction security.
In contrast, the board is recommending a combination with Netflix. Depending on the valuation method, this offer is valued between $72 and $82.7 billion. WBD’s leadership views the mix of Netflix stock and cash, coupled with the streamer’s investment-grade balance sheet, as providing a much higher degree of execution certainty. To emphasize the planned integration, Netflix Co-CEOs Ted Sarandos and Greg Peters visited the WBD studio lot on December 18.
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Regulatory Hurdles and Political Scrutiny
Despite clear corporate endorsement, the proposed deal faces political and regulatory challenges. On December 17, U.S. Senators Elizabeth Warren and Richard Blumenthal urged Attorney General Pam Bondi to recuse herself from the antitrust review, citing potential conflicts of interest. Their concern stems from Bondi’s former employer, Ballard Partners, having previously represented both Netflix and Paramount.
The WBD board also pointed to regulatory risks associated with the competing Paramount offer. A particular point of contention would be the concentration of sports rights; combining NFL and UFC rights under a single Paramount-WBD entity would, in the board’s view, likely trigger intense scrutiny from antitrust authorities.
Regarding structure, Netflix’s plan involves acquiring WBD’s film studios and streaming business, explicitly excluding the legacy Discovery cable networks. This approach is designed to limit exposure to risks from traditional linear TV infrastructure.
Shareholder Vote Looms as Critical Deadline
The clock is ticking for Warner Bros Discovery shareholders. They must vote on the competing offers by January 8, 2026. By clearly recommending the Netflix transaction and simultaneously categorizing the Paramount bid as “misleading,” the WBD board has set a definitive course.
This series of events markedly improves the odds of Netflix securing this major acquisition, thereby strengthening its role as a leading streaming provider. Until the shareholder vote concludes, Netflix’s stock price will serve as a key market indicator for the outcome of this potential mega-merger.
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