Netflix has restructured its acquisition of Warner Bros. Discovery to an all-cash deal at $27.75 per share, abandoning the original cash-and-stock structure in a move that signals exactly who holds the leverage in this transaction.
The shift to all-cash eliminates a key vulnerability: stock price volatility. The original deal exposed WBD shareholders to Netflix's share price fluctuations. If Netflix stock dropped during the lengthy merger approval process, the deal's value would decline. That gave Paramount Skydance an opening to pitch its competing $30-per-share all-cash bid as the safer option.
By going all-cash, Netflix just called Paramount's bluff. The company is effectively saying: we have the liquidity, we don't need to dilute shareholders, and we're removing any excuse for WBD's board to entertain competing offers. That's what confidence—and a strong balance sheet—looks like.
According to The Modern Daily, WBD CEO David Zaslav praised the revision, stating it "brings us even closer to combining two of the greatest storytelling companies." Translation: Netflix gave us certainty, and we're taking it.
The media consolidation endgame is playing out exactly as predicted. Legacy media companies that spent billions building streaming platforms to compete with Netflix are now being absorbed by Netflix. Warner Bros. Discovery tried to be a standalone streaming player with HBO Max. It failed. Now it's selling to the company it was supposed to compete against.
What's fascinating about the all-cash structure is what it reveals about Netflix's strategic position. The company is generating enough free cash flow to fund a major acquisition without issuing stock. That's the opposite of the narrative that Netflix needs to slow spending and focus on profitability—this is Netflix saying it can spend and remain profitable.
For Warner Bros. Discovery shareholders, the switch to cash is unambiguously good news. They get immediate liquidity at a locked-in price instead of exposure to Netflix stock volatility. But for Netflix shareholders, the calculus is more complex. The company is spending cash that could go to buybacks or dividends to acquire a legacy media business with debt and declining linear TV assets.
The question is whether Netflix is buying valuable IP and production capability or just inheriting Warner Bros. Discovery's structural problems. HBO's content library has value. Warner Bros.' film catalog has value. But the legacy cable networks? Those are melting ice cubes.
Netflix is betting it can extract more value from WBD's assets than WBD could as a standalone company. Given that WBD has been desperately cutting costs and trying to stay solvent, that's probably true. But the best deal is often the one you don't make—and Netflix is now on the hook for integrating a sprawling, debt-laden media conglomerate.
The numbers don't lie: Netflix has the cash, Netflix has the leverage, and Netflix is dictating terms. Whether this acquisition looks smart in five years is another question entirely.
