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 "full cash payment" option that would overturn the existing contract terms in order to finalize its acquisition of Warner Bros. Discovery. This move is seen as a bold strategy to neutralize the persistent resistance from rival Paramount Skydance and to swiftly conclude the acquisition process.

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 + stock" combination. On December 5 of last year, Netflix signed a $72 billion (approximately 106 trillion won) deal to acquire Warner Bros.' film and TV studios and HBO Max, setting the price at $27.75 per share. The plan was to pay shareholders $23.25 in cash and $4.50 in Netflix stock per share. However, to eliminate uncertainty caused by stock price volatility, Netflix has put forward a full cash offer. The calculation is that by offering a clear and certain reward, Netflix can quickly win over Warner Bros. shareholders.

This bold bet is backed by strong financial resources. Netflix has already secured a $59 billion bridge loan (short-term borrowing) for this acquisition, and has converted $25 billion of this amount into long-term debt to manage liquidity. Steven Flynn, Senior Credit Analyst at Bloomberg Intelligence, commented, "Netflix's cash-generating ability is so outstanding that even with large additional borrowings, it has sufficient financial capacity to maintain its current high credit rating."

The reason Netflix is considering an "all-cash" strategy, even at the risk of greater financial burden, is the intensifying interference from competitor Paramount. After suffering setbacks in the early stages of the acquisition battle, Paramount, following the Warner Bros. board's decision to side with Netflix, has recently launched a comprehensive legal offensive, including filing lawsuits demanding transparent disclosure of transaction information with Netflix. With a proxy fight expected at the upcoming shareholders' meeting and even hints of a hostile takeover (M&A), Netflix faces a growing need to eliminate uncertainty as early as possible.

Despite Paramount's obstruction, Netflix is sticking to its own path. The company recently submitted an M&A filing to U.S. regulatory authorities and has begun the approval review process. As Paramount tries to delay the process 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.