Netflix Pursues Landmark Acquisition of Warner Bros. Discovery

Streaming giant Netflix is poised to execute one of the most significant media mergers in recent history with its planned purchase of Warner Bros. Discovery (WBD). The company's shares are currently trading near the $94 level, with the ultimate fate of the deal resting on approvals from both regulatory bodies and WBD shareholders.

The completion of this transaction, anticipated within 12 to 18 months, is contingent upon receiving clearance from competition authorities. Key regulators, including the U.S. Department of Justice and the European Commission, will scrutinize the merger. A pivotal vote by Warner Bros. Discovery shareholders is scheduled for spring 2026.

This acquisition would fundamentally transform Netflix from a pure-play streaming service into a diversified media conglomerate with established film and television studio operations. The merger agreement includes a protective "collar" structure designed to shield WBD shareholders from potential volatility in Netflix's stock price prior to the deal's closure.

Deal Terms and Competing Offer

Netflix and Warner Bros. Discovery have agreed on a takeover that values WBD at an enterprise value of approximately $82.7 billion. The offer consists of $27.75 per WBD share, to be paid through a combination of cash and Netflix stock.

This week, the WBD board of directors formally recommended that shareholders accept Netflix's proposal. In doing so, the board explicitly rejected a competing, higher all-cash bid of $30 per share from Paramount Skydance. Directors cited "numerous risks and uncertainties" associated with the Skydance offer, while emphasizing the greater strategic reliability of the Netflix transaction.

Market Performance and Valuation Metrics

Following a recent stock split, Netflix shares concluded the last trading session at approximately $93.98. The stock has been trading in a narrow range recently, fluctuating between $93.45 and $95.54. The company's market capitalization now exceeds $431 billion.

Should investors sell immediately? Or is it worth buying Netflix?

Key financial metrics include:
* Current Share Price: ~$93.98
* Price-to-Earnings Ratio (P/E): ~46.5
* Offer for WBD: $27.75 per share
* Total Deal Value: $82.7 billion (Enterprise Value)
* Morgan Stanley Price Target: $120

Diverging Analyst Perspectives

Financial institutions and research firms are adjusting their models in light of the proposed merger. Analysts hold contrasting views on the implications for Netflix's stock.

Morgan Stanley has maintained its "Overweight" rating but reduced its price target for Netflix from $150 to $120. The firm points to the challenges of integrating Warner Bros. Discovery and the short-term financial pressures stemming from the large transaction size.

Conversely, other market strategists view the recent price adjustment as a buying opportunity, with some upgrading the stock to a "Strong Buy" recommendation. They highlight Netflix's robust operating margins, which are approaching 30%, and the significant long-term potential of a combined content library that would house HBO, Warner Bros., and Netflix originals.

The upcoming antitrust review process in the U.S. and Europe remains a central factor that will influence Netflix's share price trajectory in the medium term, despite the removal of one uncertainty following the WBD board's rejection of the rival bid.