Netflix, Paramount Escalate Fight for Warner Bros.

December 13, 2025 at 19:16 UTC

5 min read

Netflix stock chart with bidding war visuals, highlighting impact of Paramount and Warner Bros. news

Key Points

Netflix’s stock has fallen about 29% since June amid a high‑stakes bid for Warner Bros. Discovery
Paramount Skydance has launched a hostile, all‑cash counteroffer valuing WBD above Netflix’s deal
Netflix’s proposed $72 billion purchase of Warner Bros. studios carries a $5.8 billion breakup fee
Despite deal uncertainty, Netflix is posting double‑digit revenue growth and record ad sales

Netflix shares slide as Warner Bros. bidding war intensifies

Netflix shares are down about 29% from the end of June, a decline driven first by a post–third‑quarter earnings sell‑off tied largely to a one‑time Brazilian tax charge and more recently by mounting uncertainty around its planned acquisition of Warner Bros. Discovery’s film and television assets. In early December, Netflix surprised markets by agreeing to acquire Warner Bros. Discovery’s studios, including the Warner Bros. film and TV units and the HBO and HBO Max brands, in a deal valued at about $72 billion. The move would significantly expand Netflix’s content library but has immediately become the focal point for investors assessing the company’s risk profile and valuation.

Inside Netflix’s complex offer for Warner Bros. Discovery

Under the announced agreement, Netflix is offering Warner Bros. Discovery (WBD) shareholders $23.25 in cash and $4.50 in Netflix stock for each WBD share, valuing the stock at $27.75 and implying an enterprise value of $82.7 billion. The stock component is subject to a collar: WBD investors receive the full $4.50 in Netflix shares only if Netflix’s 15‑day volume‑weighted average price in the three days before closing is between $97.91 and $119.67. Outside that range, they would receive either 0.0460 or 0.0376 Netflix shares per WBD share, depending on whether Netflix’s price is below or above the band. The deal is expected to take 12 to 18 months to close and is structured around WBD’s plan to split into two listed companies: Warner Bros., holding the film, TV, HBO and gaming operations that Netflix wants to buy, and Discovery Global, which would house Discovery, CNN, TNT and other TV outlets. WBD shareholders would receive consideration for the Warner Bros. entity while retaining shares in Discovery Global.

Paramount Skydance counters with hostile all‑cash bid

After Netflix appeared to emerge as the winning bidder, Paramount Skydance escalated the contest by launching a hostile, all‑cash tender offer for Warner Bros. Discovery at $30 per share. Paramount values its proposal at about $108.4 billion in enterprise value and is seeking to acquire the entire company, including the Discovery Global business that would be left out of Netflix’s transaction. Paramount argues its offer is superior for WBD shareholders because it avoids the uncertainty of Netflix’s stock collar and the unknown market value of Discovery Global. Paramount management has suggested Discovery Global on a standalone basis could be worth about $1 per share given its anticipated debt load. The company also contends that its bid would face fewer regulatory hurdles than Netflix’s, which would combine the largest streaming service with the third‑largest player.

Regulatory scrutiny and breakup fees raise the stakes

Both proposed transactions face regulatory risk, but analysts and Paramount have highlighted particular antitrust concerns around Netflix’s plan to merge its leading streaming platform with Warner Bros.’ significant content and streaming assets. A Bank of America report cited in coverage of the deal stated that if Netflix acquires Warner Bros., “the streaming wars are effectively over,” describing the combined entity as an “undisputed global powerhouse of Hollywood.” Netflix has signaled confidence in its ability to close by agreeing to pay Warner Bros. Discovery a $5.8 billion termination fee under certain conditions if the deal does not complete. The approval process has taken on an additional political dimension after President Donald Trump became directly involved, with reports noting that his son‑in‑law Jared Kushner is among the investors backing Paramount’s offer.

Netflix’s core business remains strong amid deal uncertainty

The takeover battle comes at a time when Netflix’s underlying operations are performing strongly. In the third quarter of 2025, Netflix’s revenue rose 17.2% year over year, accelerating from 15.9% growth in the second quarter. Operating margin reached 28.2%, held back by roughly $619 million in expenses related to a dispute with Brazilian tax authorities. Free cash flow climbed 21% to about $2.7 billion in the quarter. Growth in membership fee revenue was the primary driver, but Netflix’s three‑year‑old advertising business is becoming more meaningful. Co‑CEO Gregory Peters said on the company’s third‑quarter earnings call that Netflix recorded its best ad sales quarter ever and is on track to more than double ad revenue this year. Management still expects full‑year operating margin to exceed last year’s level even after including the Brazilian tax charge.

Valuation reset and shifting risk profile for Netflix investors

Despite the stock’s pullback and robust operating metrics, Netflix’s valuation remains elevated. The shares trade at a price‑to‑earnings ratio of about 40, a level that assumes continued double‑digit revenue growth and rapid earnings expansion. Analysts note that the company’s risk profile has changed since June: Netflix continues to face intense competition for viewer time, and the proposed Warner Bros. acquisition introduces integration challenges and regulatory uncertainty that could add complexity and potentially weigh on the stock. Commentators describe the lower share price, combined with these deal‑related risks, as making Netflix more attractive again but not necessarily a low‑risk investment, suggesting it may be more suitable for investors willing to accept higher uncertainty around the outcome of the Warner Bros. battle.

Key Takeaways

Netflix’s bid for Warner Bros. is reshaping its risk profile just as its core streaming and advertising businesses accelerate.
Paramount’s hostile, all‑cash offer raises both the valuation bar for WBD and the competitive pressure on Netflix’s partial‑asset deal.
Regulatory and political scrutiny, combined with a large breakup fee, mean the Warner Bros. outcome could materially affect Netflix’s future trajectory and investor sentiment.