Netflix Makes Bold Move with 'All-Cash' Acquisition of Warner Bros, Surpassing 300 Million Subscribers

Netflix has made a bold move by proposing an 'all-cash deal' for its competitor Warner Bros Discovery (WBD). At the same time, it showcased its fundamental strength by releasing results that exceeded market expectations.

According to Wall Street on the 21st (Korean time), Netflix announced after the market close on the 20th that it recorded an earnings per share (EPS) of $0.56 for the fourth quarter. This figure surpasses the market expectation of $0.55.

◆ "We will overcome regulations"... Buying WBD with cash

The most notable aspect of the day was the change in acquisition terms. Netflix announced that it would acquire WBD for $27.75 per share, all cash. Initially, stock exchange methods were discussed, but it is interpreted that they chose a cash transaction to simplify and expedite the regulatory authorities' monopoly review. To this end, Netflix will temporarily halt its share buyback policy, which was a key part of its shareholder return strategy, to secure cash reserves. Co-CEO Ted Sarandos emphasized that they are doing their best to complete the acquisition of Warner Bros Studio and HBO, stating that this deal will bring strategic acceleration.

◆ A huge success for the ad-supported plan... 320 million subscribers

The core streaming business is sailing smoothly. Netflix officially announced that its global subscriber count has surpassed 325 million. In particular, thanks to the growth of the 'ad-supported plan', which has 94 million monthly active users, it is expected that advertising revenue will double compared to the previous year by 2026. Based on this, the company presented its annual revenue guidance for 2026 as $50.7 billion to $51.7 billion.

◆ What is the market's reaction?

Immediately after the announcement, Netflix's stock price rose by over 3% in after-hours trading, responding positively to the strong earnings. However, since the stock price has fallen by about 30% since the rumors of the WBD acquisition first emerged, the market is closely watching whether this cash acquisition card will be a signal for stock price recovery or if it will raise concerns about the 'winner's curse'.