Now, gather ’round, folks, and let me tell you a tale about Netflix – a company that started deliverin’ moving pictures through the mail, and now finds itself in a right proper kerfuffle over buyin’ up nearly everything in sight. Shares of the thing – Netflix (NFLX +5.99%) – took a bit of a leap on Wednesday, and wouldn’t you know it, that happened ’cause it looked like their grand scheme to swallow Warner Bros. Discovery (WBD 0.86%) and its HBO Max might just fall through. A curious turn of events, wouldn’t you say?
By the time the market decided to call it a day, Netflix stock was up near 6%. Folks seem to think a failed acquisition is a good thing. Seems counterintuitive, don’t it? Like cheerin’ when the train jumps the tracks. But there’s a method to this madness, as I’ll explain.
Paramount to the Rescue (or, a Bigger Pot to Stir)
See, Netflix is in a fierce contest with Paramount Skydance (PSKY 2.21%), a name that sounds like somethin’ out of a dime novel. They’re both tryin’ to snatch up Warner Bros. Discovery, and the biddin’s gotten so high it’s enough to make a banker blush. Netflix offered up somethin’ near $83 billion, or $27.75 a share – a king’s ransom, if you ask me. Many of the shareholders, sensible folk they are, weren’t exactly thrilled with the price. The stock’s been down ’bout 20% since this whole shebang started on December 5th.
Then, on Tuesday, Paramount upped the ante, offerin’ a straight cash deal of $31 a share for the whole kit and kaboodle. They even sweetened the pot with a $7 billion promise to pay if the regulators object. And, bless their hearts, they offered to cover the $2.8 billion Netflix would have to cough up if they backed out of their deal. It’s a game of chicken, played with other people’s money, and I reckon the chickens are gettin’ nervous.
Warner Bros. Discovery’s board, after some deliberation, admitted that Paramount’s offer “could reasonably be expected to lead to a company superior proposal.” A polite way of sayin’, “That’s a mighty fine offer, and we’re thinkin’ hard about it.” But they weren’t ready to declare a winner just yet.
Regulators to the Rescue (or, Common Sense Prevails?)
Then, Wednesday brought a bit of a surprise. Seems the attorneys general from eleven states decided to ask the U.S. Department of Justice to take a long, hard look at Netflix buyin’ up Warner Bros. Discovery. They’re worried it’ll stifle competition, and rightly so. If one company controls too much of the entertainment, folks ain’t got much choice in what they watch. It’s like havin’ only one general store in town – you pay whatever price they ask.
Now, with Paramount makin’ a bigger offer and the regulators sniffin’ around, Netflix might just decide to walk away. And, wouldn’t you know it, that’d likely be welcome news to many of its investors. They’d rather see the company focus on makin’ good shows than spendin’ a fortune on acquisitions. It’s a lesson some of these Silicon Valley fellas could stand to learn: sometimes, less is more. A sensible notion, wouldn’t you agree?
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2026-02-26 06:52