Netflix Warner Bros acquisition faces investor scrutiny as co-CEOs defend $83bn bid amid market pressure and strategic shift from building content
Netflix’s co-CEOs, Ted Sarandos and Greg Peters, faced intense investor scrutiny after the streaming giant reported earnings that coincided with its $83 billion bid for Warner Bros Discovery’s studio and streaming assets a move that represents a dramatic departure from the company’s traditional build, don’t buy strategy.
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Netflix shares have tumbled more than 15% since the bid was first announced on 5 December, with premarket trading on Wednesday showing a further drop of nearly 8%, reflecting investor unease over the high-cost acquisition and the suspension of the company’s share buyback programme.
The co-CEOs said the strategic pivot was driven by changing consumer behaviour and competition from tech giants such as YouTube, which have reshaped television viewing habits.
Peters explained that the offer for Warner Bros was not initially planned but emerged after due diligence revealed “several things we saw that were just really exciting.”
Netflix is now in a high-stakes race with Paramount Global and Skydance to acquire Warner Bros’ studios, extensive content library, and franchises including Game of Thrones and Harry Potter.
In a notable reversal of past policy, the company has also embraced theatrical releases, recognising Warner Bros’ mature and well-run cinema business.
Despite beating revenue expectations in a traditionally strong quarter, thanks in part to the final season of Stranger Things, analysts viewed Netflix’s results as underwhelming, with muted growth forecast for the year ahead.
The high costs of the acquisition including a $59 billion bridge loan and an additional $8.2 billion commitment for the all-cash $27.75 per share offer have left investors questioning the long-term payoff.
Regulatory scrutiny is expected, with lawmakers and competition authorities likely to examine the deal amid concerns that large media mergers could reduce consumer choice.
Sarandos sought to address these concerns, calling the acquisition “pro-consumer” and “pro-worker,” while highlighting opportunities for creative teams.
He emphasised that the deal would provide Netflix with access to “100 years of Warner Bros deep content and IP,” which could be leveraged to develop and distribute films and series more effectively, benefiting both audiences and the broader industry.
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For now, Netflix continues to navigate sceptical investors, a shifting market strategy, and potential regulatory hurdles, as its high-profile acquisition marks one of the most ambitious moves in the streaming sector to date.
