Warner Bros Discovery shares rose 1.6% on Tuesday as Netflix flashed its cash reserves. The streaming giant is reportedly planning to switch to an all-cash offer for its $83 billion acquisition of WBD, a move that has instilled confidence in the market. Netflix shares also gained 1% on the news.
The all-cash strategy is designed to speed up the acquisition and defeat a hostile bid from Paramount Skydance. Paramount has offered $108.4 billion for WBD, but the bid is debt-heavy and has been rejected by WBD’s board. Paramount is now engaging in a proxy fight to replace the board, adding urgency to the situation.
Netflix’s offer targets WBD’s studio and streaming assets, including HBO and the Warner Bros film library. The deal excludes WBD’s linear networks like CNN and Discovery, which will be spun off. This focus on high-growth assets is appealing to investors.
However, the deal faces significant political hurdles. US politicians have expressed concern that a Netflix-WBD merger would create a streaming monopoly. The combined entity would control a large share of the market, raising antitrust questions that could delay the closing.
Despite the risks, the stock price movement indicates that the market supports the deal. The rise in shares suggests that investors believe the all-cash offer is the best outcome for WBD, providing a secure path forward in a volatile industry.