The bidding war for Warner Bros. Discovery (WBD) has intensified, with major streaming titan Netflix (NFLX) making a second, aggressive offer. Netflix submitted a follow-up, primarily cash-based bid for Warner Discovery’s entertainment and studios businesses, a move that could derail the deal being pursued by the frontrunner, Paramount Skydance (PSKY).
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Investors are anticipating a massive shakeup of the entertainment industry as the three entertainment companies fight for control of Warner Discovery. Winning the takeover battle means gaining control of the HBO Max streaming service and the rights to beloved franchises, including Batman and Harry Potter.
Netflix Pitches Cash To Win Key Assets
Netflix’s second offer focuses solely on Warner Discovery’s valuable streaming and studio segments, avoiding the cable channels. To fund this deal, Netflix is actively working to secure tens of billions in financing.
Comcast (CMCSA), the cable and entertainment company, has also submitted a follow-up bid that mirrors Netflix’s approach, targeting only the streaming and studios segment. The three-way battle highlights the desperation among media giants to acquire key intellectual property and subscriber base amid the evolving streaming wars.
Paramount Remains The Clear Frontrunner
Despite the news of Netflix’s aggressive cash bid, Paramount Skydance remains the obvious frontrunner to win the takeover battle. Paramount is seeking to buy the entire company, not just segments, simplifying the transaction.
Paramount holds a distinct advantage due to its strong relationship with the current White House administration, which could potentially smooth the crucial process of regulatory approval. Furthermore, Paramount may have the significant financial backing of CEO David Ellison’s father, Oracle founder Larry Ellison, strengthening its financial position.
Regulatory Concerns Threaten Netflix Bid
Netflix’s ambitions face immediate scrutiny from Washington. High-level White House officials have already met to discuss concerns about a potential Netflix-Warner Discovery deal.
The primary worry is that if Netflix were to acquire Warner’s studio and streaming assets, it could gain too much power over Hollywood. This regulatory hurdle could make it significantly tougher for Netflix to get its deal “rubber-stamped,” even with a primarily cash-based offer.
What Is the 12-Month Forecast for NFLX Stock?
Analyst sentiment toward Netflix (NFLX) remains strongly bullish, which supports its aggressive move to acquire parts of Warner Bros. Discovery. Wall Street currently rates the stock a Strong Buy, based on 36 analysts tracked in the last three months. Of these ratings, 28 analysts call it a Buy, seven say a Hold, and only one recommends a Sell.
The average 12-month NFLX price target sits at $139.13. This target implies a strong upside potential of 28.24% from the last price.
