Netflix weighs all-cash offer as Warner Bros. deal faces growing resistance

Netflix is reworking the terms of its proposed acquisition of Warner Bros. Discovery, including discussions around an all-cash bid for the company’s studios and streaming operations, according to people familiar with the matter.

The revised structure is intended to smooth a transaction that could take months to complete and has already drawn political scrutiny, divided institutional investors and a hostile challenge from a rival suitor, Paramount Skydance. By shifting away from a stock component, Netflix is seeking to address concerns raised by the sharp decline in its own share price since the deal talks became public.

Under the original agreement, Warner Bros. shareholders were set to receive $23.25 in cash and $4.50 in Netflix stock, with protections triggered if Netflix shares fell below $97.91. Since Netflix began pursuing Warner Bros. in October, its stock has fallen by roughly 25 percent, touching a low of $89.07 on Tuesday.

To finance the acquisition, Netflix secured $59 billion in commitments from Wall Street banks in what would rank among the largest bridge loans on record. About $25 billion of that amount has already been refinanced into longer-term debt. Even so, Netflix retains the capacity to take on additional borrowing without jeopardizing its credit standing, according to Stephen Flynn, a senior credit analyst at Bloomberg Intelligence. In a research note on Tuesday, he described the company’s balance sheet as “very strong,” with modest net leverage.

Warner Bros. selected Netflix as its preferred buyer in early December, a decision that has since been met with sustained resistance from Paramount. David Ellison, Paramount’s chief executive, and his father, Larry Ellison, the Oracle co-founder, have mounted an aggressive counteroffensive, including a tender offer for Warner Bros. shares, a personal guarantee backing $40.4 billion in financing, and a lawsuit seeking greater disclosure around Warner Bros.’ valuation of the Netflix deal.

The Ellisons have also signaled plans to nominate directors to Warner Bros.’ board in an effort to block the transaction.