"Netflix shareholders never liked the Warner Bros. deal. The stock lost about 40% of its value in the five months after the company's interest in Warner Bros. first became public. Investors, already worried about future growth prospects at Netflix, thought the company was messing with the business model that had made it so successful, and taking on more than $50 billion in new debt to do it."
"We've always been disciplined, and at the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive, co-Chief Executive Officers Ted Sarandos and Greg Peters said in a statement. So we are declining to match the Paramount Skydance bid."
Netflix decided to exit its bid to acquire Warner Bros. Discovery after Paramount Global and Skydance Media presented a higher $111 billion offer, compared to Netflix's approximately $82.7 billion proposal. Netflix leadership stated the deal was no longer financially attractive at the required price. Investors responded positively, with shares rising 12%, as they had previously expressed concerns about Netflix overpaying and deviating from its successful streaming-focused business model. The failed acquisition would have required Netflix to take on over $50 billion in debt and fundamentally alter its operations, including theatrical releases and selling content to competitors—practices contrary to Netflix's established strategy.
#netflix-acquisition-strategy #warner-bros-discovery-deal #streaming-business-model #corporate-finance #media-industry-consolidation
Read at www.mercurynews.com
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