Is NFLX's Bid for WBD in Jeopardy Post PSKY's Hostile Offer?

Netflix's NFLX proposed $82.7 billion acquisition of Warner Bros. Discovery WBD faces mounting uncertainty following Paramount Skydance's PSKY aggressive $108.4 billion all-cash counter-offer announced on Dec. 8, 2025. Netflix's Dec. 5, 2025, agreement to acquire WBD for $27.75 per share in mixed consideration now confronts a superior bid of $30 per share, raising questions about deal completion.Netflix's transaction structure appears increasingly vulnerable to competitive pressure. The company plans to finance the acquisition while maintaining its debt profile, which was $14.46 billion as of the third quarter of 2025. With third-quarter revenues reaching $11.51 billion and a projected full-year free cash flow of approximately $9 billion, Netflix demonstrated solid operational performance. However, the complex deal mechanics requiring WBD's separation of Discovery Global in the third quarter of 2026 and an expected 12 to 18-month regulatory timeline create execution risk.Paramount Skydance's intervention fundamentally challenges Netflix's strategic positioning. The all-cash structure eliminates equity volatility concerns and addresses WBD shareholder concerns about receiving a leveraged Discovery Global stub company. More critically, Paramount Skydance emphasized regulatory obstacles facing Netflix, arguing the combination would create a dominant player with 43% global subscription video-on-demand market share across multiple jurisdictions.The financial implications extend beyond the purchase price. Netflix projected $2 billion to $3 billion in annual cost savings by year three and earnings accretion by year two. Yet Paramount Skydance's regulatory arguments carry weight, particularly in European markets where Netflix and WBD compete as the number one and two or three players. The hostile tender offer expiring Jan. 8, 2026, compresses Netflix's response timeline while Warner Bros. Discovery shareholders evaluate competing proposals. Deal certainty has diminished considerably.Paramount Skydance and Disney: Rival's Contrasting Acquisition StrategiesParamount Skydance carries $13.6 billion in gross debt as of third-quarter 2025 while pursuing the $108.4 billion all-cash WBD acquisition, demonstrating aggressive leverage tolerance despite recording a $257 million net loss. Disney DIS maintains substantially higher debt at approximately $42 billion but prioritizes streaming profitability over transformative acquisitions. Paramount Skydance posted third-quarter streaming revenue growth of 17% reaching $2.17 billion, yet faced operating losses from legacy television declines. Disney achieved fourth-quarter fiscal 2025 direct-to-consumer operating income of $352 million, with combined Disney+ and Hulu subscriptions reaching 196 million. Paramount Skydance targets $3 billion in efficiency savings through aggressive restructuring, while Disney doubled share repurchases to $7 billion for fiscal 2026. The strategic contrast reveals Paramount Skydance's transformation-through-acquisition approach against Disney's organic expansion strategy.NFLX’s Price Performance, Valuation & EstimatesShares of Netflix have plunged 21% in the past six-month period against the Zacks Broadcast Radio and Television industry’s decline of 7.7%.NFLX’s 6-Month Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 8.11X compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.3X. NFLX carries a Value Score of D.NFLX’s ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $45.1 billion, suggesting 15.63% year-over-year growth. The consensus mark for 2025 earnings is pegged at $2.53 per share, unchanged over the past 30 days. This indicates a 27.78% increase from the previous year.Netflix, Inc. Price and Consensus Netflix, Inc. price-consensus-chart | Netflix, Inc. QuoteNFLX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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(WBD): Free Stock Analysis Report Paramount Skydance Corporation (PSKY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks