Netflix (NFLX) set off one of the most spectacular media moves in years as it agreed to buy Warner Bros. Discovery (WBD) for $72 billion. The move came after weeks of talks that began as a simple review of the studio’s assets. However, the talks soon turned into a real plan to add a major film and TV library to Netflix. The deal also gives Netflix new paths in film release and studio work. Reuters reported that these assets add fresh value since older shows and films still drive most use on large streaming platforms.
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Why Netflix’s Offer Won
According to Reuters, as the auction began in late October, Warner Bros Discovery had already turned down bids from Paramount Global Skydance (PSKY). Later, Paramount raised its offer to $30 per share, yet board members had concerns about how the plan would be funded. Meanwhile, Comcast (CMCSA) pushed a merger proposal that would have tied its NBCUniversal unit to Warner Bros. Discovery. The structure would have taken years to set up.
By contrast, Netflix sent in a clear offer by December 1. It came with firm terms and a breakup fee of $5.8 billion. This fee was meant to show strong faith that the deal would pass a lengthy review process. As board talks continued each day, members leaned toward the offer that could close with fewer steps and bring faster gains.
What Led to the Final Deal
In June, Warner Bros Discovery said it planned to split the studio and streaming units from its cable networks. Soon after, JPMorgan Chase (JPM) bankers advised the company to shift that plan to create more room for a sale. Once the auction started, Netflix worked with its advisers on daily calls. The group kept up work through the holiday week to meet the final deadline.
As the review neared an end, the Warner Bros Discovery board met each day for the last week. They viewed Netflix’s bid as the only one with full terms in place. Late on Thursday, the board accepted the plan. Reuters said the news set off cheers on the Netflix side after the team spent weeks seeing the odds as a coin flip.
Is NFLX Stock a Buy?
Turning to the Street, Netflix boasts a Moderate Buy consensus, based on 37 analysts’ ratings. The average NFLX stock price target is $137.65, pointing to a 37.32% upside from the current price.
