Netflix defends $83-billion Warner Bros bet as investors remain unconvinced

Netflix’s leadership found itself on the defensive after the streaming giant’s latest earnings report, as investors reacted skeptically to its nearly $83-billion bid for Warner Bros. Discovery’s studio and streaming assets.

The deal represents a sharp break from Netflix’s long-standing “build, don’t buy” philosophy, and markets have yet to warm to the strategic pivot. Netflix shares have fallen more than 15 percent since the company made its first offer for Warner Bros assets on December 5, and were down nearly 4 percent in early trading on Wednesday.

The pressure has forced Netflix to suspend share buybacks, putting co-CEOs Ted Sarandos and Greg Peters in the unusual position of having to defend an acquisition-led growth strategy.

Sarandos said shifts in how audiences consume television, driven by tech platforms such as YouTube, had pushed Netflix to rethink its approach. Peters added that the company had not initially expected to pursue a deal of this scale when it began due diligence.

“When we got into the hood, there were several things we saw that were just really exciting,” Peters said.

Netflix is racing to stay ahead of rival bidder Paramount Skydance with its $82.7-billion all-cash offer for Warner Bros’ film and television studios, streaming operations, and a deep catalogue of entertainment franchises, including Harry Potter and Game of Thrones.

Sarandos acknowledged that the deal reverses Netflix’s earlier skepticism toward theatrical distribution. “We’ve often debated building a theatrical business, but it was never our priority. Warner brings a mature, well-run theatrical operation with amazing films, and we’re excited about that addition,” he said.

Peters also highlighted HBO as a major draw. “It’s an amazing brand. It stands for prestige television. Customers know it, love it, and know what it means,” he said, adding that Warner’s television studio would complement Netflix’s existing production capabilities.

Despite management’s optimism, investor concerns remain. Netflix delivered a modest revenue beat in what is typically one of its strongest quarters and forecast subdued growth for the year ahead. Analysts said high costs tied to the Warner Bros acquisition have heightened uncertainty around long-term returns.

Netflix has secured commitments for a $59-billion bridge loan to finance the transaction and recently increased that facility by $8.2 billion to support its all-cash offer of $27.75 per share. The deal is expected to face close scrutiny from competition regulators and lawmakers amid broader concerns about consolidation in the media and entertainment industry.

Sarandos has sought to reassure stakeholders, describing the transaction as “pro-consumer” and “pro-worker,” and arguing that it would create new opportunities for creative talent.

The acquisition, he said, would give Netflix access to “100 years of Warner Bros content and IP” and enable broader development and distribution across platforms.