WBD Deal Got Bigger! Why Netflix Bets on It? Which Stock Would You Trade?

$Paramount Skydance Corp(PSKY)$ launched an all-cash tender offer for $Warner Bros. Discovery(WBD)$ on Monday, proposing to buy all outstanding shares of WBD at USD 30 per share — disrupting the acquisition deal $Netflix(NFLX)$ announced last week.

Last Friday, Netflix and WBD announced a binding agreement under which Netflix would acquire WBD’s studio business and HBO Max for USD 72 billion (enterprise value USD 82.7 billion).

1. USD 30 vs. USD 27.75 — what’s the difference?

Paramount’s proposal is to acquire the entire WBD, including all TV networks such as CNN, TBS, TNT, and others.

Its all-cash offer gives WBD an enterprise value of USD 108.4 billion (including debt).

In contrast, Netflix’s offer uses a deal structure priced at USD 27.75 per share (USD 23.25 cash + USD 4.50 in stock), with pricing collars and sensitivity to Netflix’s future stock performance.

Its proposal implies an enterprise value of USD 82.7 billion (excluding TV networks).

2. Why is Paramount confident enough to launch a hostile takeover?

The offer is backed by $Oracle(ORCL)$ co-founder Larry Ellison and RedBird Capital Partners — the same investors financing Skydance Media’s acquisition of Paramount Global. The new WBD bid also has support from the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi.

Paramount also says the deal will be partially financed through USD 54 billion in debt commitments from Bank of America, Citibank, and Apollo Global Management.

However, some have questioned this:“Oracle’s CDS spreads have blown out — where is the money coming from?”

3. The political factor cannot be ignored

Netflix executives traditionally lean Democratic, and the Trump administration’s resistance may reflect ongoing political dynamics.

On Sunday, Trump said the combined Netflix–WBD entity’s “huge market share” could “be a problem.” He added he would personally get involved in reviewing the deal.

Trump has close ties to Oracle co-founder Larry Ellison. Ellison’s son, David Ellison, is the CEO of Paramount Pictures. One supporter of Paramount’s counter-offer is Affinity Partners, the private equity firm run by Trump’s son-in-law Jared Kushner.

However, on Monday Trump downplayed his involvement, saying neither Paramount nor Netflix were his “close friends.”

4. Impact on Netflix: Buying growth, buying IP — is the deal worth it?

Netflix is now in a phase of slowing user growth because the platform is already extremely large. For a business with such scale, re-accelerating growth is very difficult.

Netflix Co-CEO Greg Peters told analysts that Netflix and HBO Max share a highly overlapping user base, and these overlapping users generate significant revenue. He added that Netflix could offer HBO content through different bundles and pricing tiers and distribute it aggressively worldwide.

WBD owns “phenomenal IP” that travels across borders and platforms — from Harry Potter and Game of Thrones to The Sopranos, Lord of the Rings, Friends, The Big Bang Theory, and the DC comic universe.

While WBD’s streaming growth has stalled — HBO Max has critical acclaim but a long road to profitability — the Netflix bid appears to be a major gamble on “buying growth expectations” amid weak advertising and slower subscriber growth.

5. How to trade this case? $Netflix(NFLX)$ , $Warner Bros. Discovery(WBD)$ , or $Paramount Skydance Corp(PSKY)$ ?

Netflix previously said the acquisition would take around 6 months — assuming no regulatory interference.
Now, with political pushback, the timeline could be much longer. For reference, Microsoft’s acquisition of Activision took nearly two years.

WBD and PKSY both surged yesterday. WBD has already exceeded the Netflix offer price of USD 27.75 intraday.

Technical levels to watch: For NFLX, key levels are 92, 90, and 85 USD. Some believe that with such event-driven volatility, it’s better to wait until the stock gets “very cheap.”

Forward PE remains to be high. But if you hold for long term, maybe a good chance to DCA.

1. WBD remains extremely volatile. On one hand, it’s difficult to rise far beyond the acquisition price —but if the hostile bidding continues and someone raises the offer again?

2. Call spread or iron condor — which would you choose?

3. Would you buy the dip of Netflix?

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