The streaming industry’s battle for dominance is reaching a pivotal moment. Netflix’s pursuit of the largest media acquisition in history has faced significant turbulence, including a rival hostile bid that rattled markets. A decisive move by the target company’s leadership, however, has now clarified the immediate landscape.
Warner Bros. Discovery Board Rejects Paramount, Backs Netflix
On December 17, the board of Warner Bros. Discovery (WBD) issued a unanimous declaration of support for its existing merger agreement with Netflix. In the same statement, the directors advised shareholders to reject a competing $108.4 billion cash offer from Paramount Skydance. The board’s rationale was explicit, labeling the Netflix proposal as the “best and surest path” for its investors.
While Paramount’s bid was nominally higher, the WBD board dismissed it as “illusory,” citing deep concerns over financing security. Specific reservations included the offer’s reliance on sovereign wealth funds from the Middle East and the absence of an unconditional commitment from the Ellison Trust. In contrast, Netflix’s proposal is backed by secured credit commitments from major institutions like Wells Fargo and features a substantial $5.8 billion reverse termination fee, underscoring the deal’s credibility.
Market Sentiment Reflects Lingering Caution
Despite this operational victory for Netflix, its share price reaction has been muted. The stock has shed approximately 20% of its value since peaking in June 2025, as the market prices in the deal’s significant execution risks and hefty valuation. Although shares remain up about 8% year-to-date, the initial euphoria has dissipated.
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The reaction of WBD’s stock is telling: it recently traded below Netflix’s offer price of $27.75 per share. This movement suggests that market participants now view a renewed bidding war as unlikely and are adjusting their positions based on the expectation of a Netflix-WBD combination.
Strategic Promise Meets Regulatory Reality
Strategically, the merger would forge a media powerhouse. Netflix would gain control of the HBO Max platform and its roughly 100 million subscribers, alongside iconic franchises including the DC Universe, Harry Potter, and Game of Thrones. Netflix management projects the acquisition will become accretive to earnings per share by the second year following its close.
The final and most formidable obstacle remains regulatory approval. The combined entity would command an estimated 33% share of the U.S. streaming market, a concentration that will draw intense scrutiny from antitrust authorities in both the United States and the European Union. Complicating matters, President-elect Trump has already intervened, stating that the sale of CNN would be a mandatory condition—a factor that could add a layer of complexity to negotiations.
Until the anticipated closing in 12 to 18 months, political and regulatory developments are likely to be the primary drivers of stock price movement. In the near term, investor focus shifts to January 20, 2026, when Netflix is scheduled to report its fourth-quarter results. Analysts are forecasting revenue growth of 17% for the period.
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