Netflix shifts to all-cash offer for Warner Bros. Discovery

On Tuesday, Netflix and Warner Bros. Discovery released a statement announcing that Netflix is revising its acquisition offer for Warner Bros. Discovery to be an all-cash deal. The streaming giant is revising the cash-and-stock deal it had previously struck with the board. The revised structure maintains the previously agreed-upon price of $27.75 per share for Warner Bros. Discovery’s movie studio and streaming assets, valuing the company at $82.7 billion. According to the companies, shifting to an all-cash deal simplifies the transaction structure, offers more certainty regarding its value, and accelerates the timeline for a shareholder vote. Netflix stated it would finance the deal using cash, debt, and committed financing.

The revision sets up a direct comparison between the competing proposals for Warner Bros. Discovery:

• The Netflix Offer: An all-cash transaction valuing the company at $82.7 billion, or $27.75 per share, which Warner Bros. Discovery’s board continues to favor.
• The Paramount Skydance Offer: An all-cash, $30-per-share bid for the entire company, backed by a $40 billion guarantee from Oracle co-founder Larry Ellison.

The change in deal structure comes as rival suitor Paramount Skydance, led by CEO David Ellison, intensifies its efforts to win over shareholders. Paramount, which has been trying to buy Warner Bros. Discovery for months, last week sued the company for more information on Netflix’s offer after Warner Bros. Discovery rebuffed its bids. Warner Bros. Discovery argues that selling to Netflix is better because Paramount’s deal poses “materially more risk,” according to Warner Bros. Discovery. The company argues the Paramount transaction would saddle the combined entity with $87 billion in debt, which could worsen Paramount’s current non-investment grade credit rating. Warner Bros. Discovery also raised concerns about Paramount’s negative free cash flow, which would be exacerbated by the acquisition.

The battle for the media giant began in October, when Warner Bros. Discovery announced it was exploring a sale after receiving unsolicited interest from multiple parties. At the time, the company was valued at over $45 billion but burdened with billions in debt, struggling amid declining cable viewership and intensifying competition from streaming rivals. Netflix ultimately emerged on top after winning a bidding war against Paramount and previous bidder Comcast.

Why it matters

The shift to an all-cash structure highlights the intense competition for legacy media assets and the strategic importance of deal certainty when facing rival bids with higher debt profiles.