Key Points
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Investors are concerned about Netflix’s $72 billion proposed acquisition of Warner Bros. Discovery, particularly due to the financing through high debt and the potential for increased subscription fees.
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Management argues that the acquisition could disrupt traditional media and attract more subscribers by offering a new combined streaming service.
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Netflix’s free cash flow stands at less than $9 billion, raising doubts about the financial viability of the deal.
Netflix (NASDAQ: NFLX) has announced a $72 billion acquisition of Warner Bros. Discovery, a move that analysts have greeted with skepticism. Key concerns include the financing of the deal through significant debt and the implications for subscription prices, which could lead to potential subscriber losses. Netflix’s current free cash flow is less than $9 billion, creating further apprehension about this unprecedented acquisition.
In defense of the deal, Netflix management claims it will enhance content offerings and streamline operations, potentially increasing subscriber numbers and boosting revenue. Despite the immediate market reaction, they believe the merger could redefine the media landscape by integrating Warner Bros.’ operations into Netflix’s successful business model.
