Netflix & The $83 Billion…What Was I Saying?

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So, Netflix. They went from mailing you DVDs – remember that? A physical disc! – to, well, this. A streaming behemoth. The stock’s done okay, up a ridiculous 826% in ten years. It’s…fine. It’s just, you know, success. It makes people…different. And now, they’re talking about spending $83 billion. Eighty-three! On Warner Bros. Discovery. It’s…a choice.

It’s not the money, necessarily. It’s the principle of the thing. You build a perfectly good business, a streamlined operation, and then you decide you need…more stuff? More content? Like we’re all just sitting around, desperately craving more content. It’s exhausting!

This Merger…It’s Complicated

They’re offering all cash, $27.75 a share. All cash! Like that solves everything. As if a check washes away years of questionable creative decisions. They’ll use $20 billion they have lying around – lying around – and borrow another $52 billion. Fifty-two! And then, factoring in Warner Bros. Discovery’s debt…it balloons to $82.7 billion. It’s just…a number. A really big number.

Netflix historically hasn’t been the ‘big spender’ type. They grew organically. It was almost…respectable. Disney, of course, bought 21st Century Fox for $71 billion. Amazon snagged MGM for a measly $8.5 billion. Last year, Disney got the rest of Hulu for nine billion. It’s like a competition to see who can throw away the most money. And now Netflix is joining in.

And don’t even get me started on sports. They were hesitant to get involved in live sports. Smart! It’s a mess. Now they’re warming up to it? Because everyone else is doing it? It’s a herd mentality. A complete lack of independent thought. Amazon, Alphabet, Apple…they’re all throwing money at it. It’s infuriating!

They claim this benefits everyone. Consumers, people in the entertainment industry, investors. Right. Because everyone always gets what they want. It’s a utopian fantasy.

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So, Will It Work? Honestly?

They’re hoping for $2 to $3 billion in annual cost savings. That sounds…optimistic. And they think it’ll boost earnings per share in year two. Maybe. It’s all projections. Guesses. And, frankly, I don’t trust anyone who makes projections.

Is it enough to justify $83 billion? That’s the question, isn’t it? They built a successful company, I’ll give them that. But building something and making smart financial decisions aren’t necessarily the same thing.

Investors should be skeptical. History isn’t on their side. KPMG data shows that over half of mergers and acquisitions destroy shareholder value. Destroy! In the two years following the deal. It’s a terrible track record.

And the market seems to agree. Since the announcement on December 5th, Netflix shares have dropped 16%. Sixteen percent! People are voting with their wallets. They’re saying, “This is a mistake.” And, frankly, I’m inclined to agree. It’s just…a lot of money. For what, exactly?

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2026-02-02 01:53