Netflix has submitted an amended all-cash acquisition offer for Warner Bros Discovery’s studio and streaming businesses, securing unanimous approval from the media company’s board without increasing the overall purchase price of $82.7 billion.
The revised proposal, disclosed in a regulatory filing on Tuesday, represents a significant shift from Netflix’s original offer structure, replacing the previous cash-and-stock mix with a fixed cash transaction designed to provide shareholders with immediate value certainty.
Under the updated merger agreement, Netflix would pay Warner Bros Discovery shareholders $27.75 per share in cash in exchange for the company’s film and television studios, its extensive entertainment library, and the HBO Max streaming platform.
According to the filing, the change was made to remove market volatility risks associated with Netflix’s share price and to strengthen the attractiveness of the offer amid competing bids.
“The merger consideration is a fixed cash amount to be paid by an investment-grade company, providing Warner Bros Discovery stockholders with certainty of value and immediate liquidity upon closing,” the company stated.
Shift From Stock to Cash
Netflix’s initial bid, announced in early December, offered shareholders $23.25 in cash and $4.50 in Netflix stock. However, since the announcement, Netflix shares have fallen nearly 15 percent, closing last Friday at $88 per share, well below the $97.91 floor price included in the original deal structure.
The decline raised concerns among Warner Bros investors about potential valuation erosion. The amended all-cash offer removes that uncertainty while keeping the total purchase price unchanged.
Industry analysts say the move reflects Netflix’s determination to secure the deal amid intense competition and growing investor scrutiny.
Discovery Global Spin-Off Explained
Alongside the merger announcement, Warner Bros Discovery’s board released new details about the valuation of Discovery Global, a planned spin-off entity that will house the company’s traditional television assets.
The spin-off will include major cable networks such as CNN, TNT Sports, and the Discovery+ streaming service, allowing Warner Bros shareholders to retain equity in a separately traded company after the Netflix transaction.
According to board disclosures, advisers used three different valuation models to assess Discovery Global’s worth.
The lowest valuation estimated the entity at $1.33 per share, applying a uniform value across all assets. The upper estimate reached $6.86 per share, assuming the spin-off could later become part of a strategic merger or acquisition.
Warner Bros executives argue that this retained ownership gives shareholders upside potential not available under rival bids.
Paramount–Skydance Rival Offer
The Netflix deal has faced competition from Paramount Global and Skydance Media, which submitted a $30-per-share all-cash offer for Warner Bros Discovery.
Despite the higher headline price, the Warner Bros board has consistently maintained that Netflix’s proposal offers superior long-term value due to the Discovery Global spin-off component.
Paramount, however, has strongly disputed that claim, arguing that the cable-heavy spinoff is effectively “worthless” in an industry rapidly shifting away from traditional television.
The disagreement escalated earlier this month when Paramount filed a court motion on January 12, seeking to expedite disclosure of Warner Bros’ internal valuations so investors could more accurately compare the two competing offers.
Court Rejects Paramount Challenge
A Delaware court judge rejected Paramount’s request, ruling that the company failed to demonstrate it would suffer irreparable harm from the alleged lack of disclosure.
The decision allowed Warner Bros to proceed without releasing additional financial details beyond those already provided in regulatory filings.
Following the ruling, Warner Bros reiterated its reasons for rejecting the Paramount bid, stating that the $30-per-share offer failed to adequately compensate shareholders when accounting for what it described as “price and numerous risks, costs and uncertainties.”
Debt and Financial Strength Comparison
One of the central arguments in favour of the Netflix deal lies in balance sheet strength.
A merger between Netflix and Warner Bros Discovery would leave the combined company with approximately $85 billion in debt, compared with an estimated $87 billion under a Paramount transaction.
However, Netflix’s significantly larger market capitalisation — currently around $402 billion — provides far greater financial flexibility compared with Paramount’s valuation of roughly $12.6 billion.
Warner Bros noted in its filing that the Netflix transaction would result in a leverage ratio of under four, substantially lower than the projected ratio of about seven under a Paramount-led merger.
Credit Ratings a Key Factor
Credit quality also played a decisive role in the board’s recommendation.
Netflix maintains an investment-grade credit rating, enabling it to borrow at lower interest rates and maintain stronger access to capital markets.
By contrast, Paramount’s bonds are rated at junk status by Standard & Poor’s and analysts have warned that a large acquisition could place further pressure on its balance sheet.
“Netflix’s financial profile significantly reduces execution risk,” Warner Bros said, adding that the streaming giant’s stable cash flows and scale position it better to manage the evolving entertainment landscape.
Strategic Implications for Streaming
If completed, the deal would mark one of the largest mergers in media history, combining Netflix’s global subscriber base with Warner Bros’ iconic franchises, including DC Entertainment, Harry Potter, HBO originals, and a century-spanning film archive.
Industry experts say the acquisition would strengthen Netflix’s competitive position against rivals such as Disney, Amazon Prime Video and Apple TV+, while accelerating consolidation across Hollywood.
The transaction remains subject to regulatory review and shareholder approval, with antitrust scrutiny expected in both the United States and international markets.
What Comes Next
Warner Bros shareholders are expected to vote on the deal in the coming months. Meanwhile, regulators will assess potential competition concerns related to content ownership, market dominance and streaming distribution.
Despite those hurdles, analysts believe the revised all-cash structure significantly improves the likelihood of approval.
As global media companies face rising production costs, slowing subscriber growth and investor pressure for profitability, the proposed Netflix–Warner Bros Discovery merger may signal a new era of consolidation within the entertainment industry.
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