Netflix Goes All-In With Cash for $72 Billion 'Deal of the Century'... Overcoming Paramount's Obstacles

Netflix Bets on All-Cash Offer for Warner Acquisition
Eliminating Stock Volatility to Secure Shareholder Support
Swift Response to Paramount's Legal Challenge

Ted Sarandos, Co-Chief Executive Officer (CEO) of Netflix, is giving a greeting ahead of the 'Netflix and Korean Content Meeting' on the morning of the 22nd at the Four Seasons Hotel in Jongno-gu, Seoul. Photo by Joint Press Corps

Netflix is considering a bold move to finalize its acquisition of Warner Bros. Discovery by offering an "all-cash payment," overturning the existing contract terms. This strategy is seen as an attempt to neutralize the persistent resistance from rival Paramount-Skydance and to bring the acquisition process to a swift conclusion.

According to Bloomberg News on January 14 (local time), citing sources familiar with the matter, Netflix is discussing a new plan to pay the entire acquisition amount in cash, instead of the originally planned "cash plus stock" mix. On December 5 of last year, Netflix signed a deal to acquire Warner Bros.' film and TV studios and HBO Max for $72 billion, setting the price at $27.75 per share. The initial plan was to pay shareholders $23.25 in cash and $4.50 worth of Netflix stock per share. However, Netflix has now proposed an all-cash offer to eliminate uncertainties caused by stock price volatility. The calculation is that by offering a guaranteed payout, Netflix can swiftly win over Warner Bros. shareholders.

This bold bet is backed by Netflix's strong financial resources. Netflix has already secured a $59 billion bridge loan for the acquisition, and has converted $25 billion of this into long-term debt for liquidity management. Commenting on this, Steven Flynn, Senior Credit Analyst at Bloomberg Intelligence, said, "Given Netflix's exceptional cash generation ability, the company has ample financial capacity to maintain its current strong credit rating even if it takes on significant additional debt."

Netflix is considering an "all-in cash" strategy despite the financial burden because of escalating interference from competitor Paramount. After suffering a setback in the early stages of the bidding war and seeing the Warner Bros. board side with Netflix, Paramount has launched a broad legal offensive, including filing lawsuits demanding transparency regarding its dealings with Netflix. Paramount has also signaled its intention to pursue a hostile merger and acquisition, hinting at a proxy fight at the upcoming shareholders' meeting. As a result, Netflix feels an increasing need to eliminate uncertainty as early as possible.

Despite Paramount's obstruction, Netflix is sticking to its own course. The company recently submitted its merger and acquisition filing to U.S. regulatory authorities and has begun the approval review process. As Paramount tries to delay proceedings through legal battles, the industry is closely watching to see whether Netflix, leveraging its overwhelming financial strength, will be able to close the "deal of the century" ahead of schedule.