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Netflix (NASDAQ: NFLX) has formally ended its bid to amass the studio and streaming operations of Warner Bros. Discovery (NASDAQ: WBD). The goal firm had every week to consider a raised bid from Paramount Skydance (NASDAQ: PSKY), and got here again leaning towards a Paramount deal in half that point.
Pending regulatory approval, it’s a achieved deal. Netflix shares opened Friday’s buying and selling 11.6% larger on the information. Warner Bros. inventory fell by roughly 2% and Paramount soared greater than 18% larger. Mixed, the three shares added roughly $40 billion of market worth right this moment.
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Netflix dodges a $40 billion debt bomb
Was this the perfect final result for Netflix? Perhaps not from an business domination perspective, however it definitely places Netflix in a much less nerve-racking monetary scenario.
Netflix had $9 billion of money and $13.5 billion in long-term debt on the finish of 2025. To finance its all-cash buyout bid, the corporate would have wanted greater than $40 billion of further debt. As an alternative, it walks away with a $2.8 billion deal breakup payment, to be paid by Paramount.
As thrilling as a mega-studio combining Warner Bros. and Netflix may need been, a clear stability sheet (with an additional $2.8 billion) could possibly be the best final result for Netflix and its shareholders.
What Netflix will do with all that money
And the money goes to work instantly. Netflix’s administration promised to take a position $20 billion in content material manufacturing this 12 months, up from a previous 2026 manufacturing dedication of $11.5 billion. The inventory buyback program can be again in motion, having been paused to preserve money for the Warner Bros. deal.
The resumed buybacks strike me as a neatly opportunistic transfer. Netflix’s inventory posted a drawdown of 43% from final summer time’s peak, principally resulting from considerations in regards to the costly buyout battle. Canceling shares at a deep {discount} ought to be a shareholder-friendly thought and a superb use of spare money.
Netflix inventory seems to be like a deep-discount deal at this level, even after Friday’s bounce.