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Netflix posted a narrow earnings beat and hit 325 million subscribers in the final quarter, 23 million more than a year earlier. Revenue landed slightly above expectations, helped by a strong content slate, including the final Stranger Things season.
Yet shares fell as investors focused on the looming Warner Bros deal and Netflix’s decision to suspend share buybacks to help fund it. When a firm buys its own shares, the price tends to go up, so investors were not happy about the pause.
The message from Wall Street: a decent quarter, but risks ahead feel bigger.
Netflix is locked in a battle with Paramount Skydance over Warner Bros Discovery. After the Warner Bros board decided to go with Netflix’s offer, Paramount launched a hostile bid of $30 per share paid in cash.
To counter this, Netflix changed its original cash-and-stock bid to an all-cash offer of $27.75 per share, giving Warner Bros enterprise value of $82.7 billion.
At stake are major franchises like Harry Potter, DC Universe (including Superman and Batman), and Game of Thrones.
Warner board says Netflix’s proposal is the safer, cleaner option. Paramount has extended its hostile bid, aimed directly at shareholders, until February 20, giving it more time to convince investors.
Here’s how the deals compare:
On the earnings call, Netflix co-CEO Ted Sarandos made an unusually blunt point: YouTube and other big tech rivals have redefined television.
“TV is not what we grew up on. Oscars and the NFL are on YouTube”, he said.
“Amazon owns MGM. Apple is competing for Emmys and Oscars, and Instagram is coming next."
Netflix sees itself competing with big tech for talent, ad dollars, and viewer attention. The Warner Bros deal, Sarandos argued, is part of keeping pace in this new world.
If approved, the Netflix-Warner merger would leave the combined company with roughly $85 billion in debt, slightly less than a Paramount tie‑up would create. Netflix says its investment‑grade credit rating and simplified all‑cash structure give Warner shareholders more certainty. Still, regulators are expected to scrutinize the deal, and Netflix’s stock has fallen more than 15% since the merger was announced, hence the switch to an all-cash deal.