TLDR
- Netflix is considering a bid to acquire Warner Bros. Discovery with the first round of bids due Thursday
- CNBC’s David Faber says Netflix is taking the offer “very seriously” and could buy WBD if they choose to
- The deal faces tough antitrust implications, particularly around owning both HBO and Netflix’s streaming service
- Paramount is seeking a full $74B buyout of WBD at $30 per share, while Netflix and Comcast are interested in specific operations
- Netflix maintains a market cap of $466.11B with over 300 million global subscribers and strong financial metrics
Netflix is evaluating a potential acquisition of Warner Bros. Discovery as the deadline for first-round bids approaches Thursday. The move would mark the streaming company’s largest acquisition to date.
CNBC’s David Faber reported Wednesday that Netflix is considering the offer “very seriously.” He suggested the streaming giant holds a key position in the bidding process.
“If they want to own Warner Bros., they can,” Faber stated during his CNBC appearance. However, he noted Netflix doesn’t necessarily need to make the purchase.
The potential deal comes with regulatory challenges. Faber pointed to antitrust concerns around Netflix owning both its streaming platform and HBO.
“The antitrust implication of owning HBO along with Netflix—that’s a tough one,” he explained. The deal could either impact Netflix’s valuation multiple or prove accretive up to a substantial figure.
Multiple Bidders in the Mix
Paramount is pursuing a full buyout of Warner Bros. Discovery. Recent reports indicate WBD wants Paramount to offer $30 per share in a deal valued at over $74 billion.
Paramount has already submitted three bids. All were rejected. A Variety report suggested the David Ellison-led company, along with Arab sovereign wealth funds, is preparing a $71 billion offer. Paramount has denied this claim.
Comcast is also interested but faces complications. Faber described a potential Comcast deal as “very difficult” and questioned whether its bid could match Paramount’s offer.
Netflix and Comcast are focusing on specific Warner Bros. Discovery operations rather than a complete acquisition. This approach differs from Paramount’s strategy of seeking full ownership.
Financial Position and Concerns
Netflix operates with a market capitalization of $466.11 billion. The company serves more than 300 million subscribers across global markets outside China.
The streaming service maintains a single business model focused on its platform. Revenue growth over the past three years reached 10.8 percent.
Netflix’s operating margin stands at 29.15 percent. The net margin sits at 24.05 percent. These figures demonstrate strong profitability.
The company’s debt-to-equity ratio of 0.56 shows balanced leverage. Current and quick ratios both measure 1.33, indicating solid liquidity.
However, insider activity shows 12 selling transactions over the past three months with no buying. The P/E ratio of 45.95 runs high compared to historical medians.
Netflix’s Streaming Operations
The company introduced ad-supported subscription plans in 2022. This addition gives Netflix exposure to advertising revenue beyond traditional subscription fees.
Netflix has avoided regular live programming and sports content. Instead, the platform focuses on on-demand episodic television, movies, and documentaries.
The streaming service maintains exposure to nearly the entire global population outside China. This reach positions the company as the largest television entertainment subscriber base in both the United States and international markets.
Warner Bros. Discovery’s board will meet before Thanksgiving to evaluate all submitted offers. The film industry has expressed concern about potential impacts on theatrical film distribution if Netflix acquires WBD. Netflix plans to maintain theatrical releases if the acquisition proceeds.
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