The New York Budgets

Tag: Netflix Inc.

  • Paramount Wins Bidding War for Warner Discovery After Netflix Backs Out

    Paramount Wins Bidding War for Warner Discovery After Netflix Backs Out

    Paramount Global—now under the control of Skydance Media—has clinched a $81 billion deal to acquire Warner Bros. Discovery Inc., outbidding streaming behemoth Netflix Inc. after the latter bowed out, citing the escalated price as no longer viable. The victory for David Ellison’s Paramount caps a contentious takeover saga, uniting storied assets like HBO, CNN, and the DC Comics universe under one roof, while raising fresh antitrust alarms in an industry already grappling with consolidation and shifting viewer habits.

    Netflix co-CEOs Ted Sarandos and Greg Peters announced the withdrawal in a statement late Thursday, hours after Warner’s board deemed Paramount’s revised $31-per-share all-cash offer superior to Netflix’s $27.75-per-share bid for the studios and HBO Max alone. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” they said, emphasizing fiscal discipline amid Wall Street’s scrutiny of Netflix’s ballooning content spend. The decision sent Netflix shares (NFLX) surging 10% in after-hours trading to $682.50, recouping some of the $170 billion market value erosion since rumors of its Warner pursuit surfaced in September 2025. Analysts at JPMorgan hailed the pullback as “prudent,” noting Netflix’s subscriber base hit 285 million in Q4, up 12% year-over-year, without the added debt burden.

    For Warner Bros. Discovery (WBD), the deal—pending regulatory nods—marks a lifeline under embattled CEO David Zaslav, whose cost-cutting regime has drawn ire but delivered hits like the Oscar-nominated “Sinners” and “One Battle After Another.” Zaslav, in a memo to staff, celebrated the merger as a value-maximizer for shareholders, projecting $6 billion in synergies through streamlined operations and shared IP like Harry Potter and Superman. “Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value,” he stated. Warner shares dipped 0.35% to $10.85 in regular trading but climbed 2% after-hours on merger optimism.

    Netflix Inc.
    Netflix Inc.
    Source: FactSet

    Paramount’s path to victory was fraught. Ellison, son of Oracle founder Larry Ellison, prioritized Warner after Skydance’s $8.4 billion takeover of Paramount in August 2025, viewing the combo as essential to compete against Disney, Netflix, and Amazon in the $500 billion global entertainment market. Initial overtures were rebuffed, but Paramount’s hostile $30-per-share bid in December—escalating to $31 this week—prevailed. Key concessions included a $7 billion termination fee for regulatory failures and covering Warner’s $2.8 billion breakup payout to Netflix, plus an accelerated “ticking fee” of 25 cents per share quarterly starting September 30.

    The merger creates a colossus: Paramount gains Warner’s film/TV studios, HBO Max (with 110 million subscribers), and cable nets like CNN, TNT, TBS, and Food Network—bolstering its Peacock and Paramount+ platforms amid a streaming wars projected to reach $240 billion by 2030, per PwC. Yet, hurdles loom. The Justice Department, already probing Netflix’s bid for anticompetitive practices, will scrutinize this tie-up, especially combining legacy studios and news outlets. Media watchdogs like Free Press’s Craig Aaron decried it as “unthinkable,” warning that folding CNN into CBS News could amplify biased coverage, particularly on sensitive issues like Israel’s actions in the Middle East—where consolidated ownership risks amplifying pro-Israel narratives at the expense of balanced reporting.

    Ellison’s revamp of CBS News—installing Bari Weiss as editor-in-chief to target “center-left to center-right” audiences—has sparked concerns of editorial shifts, potentially tilting foreign policy discourse. CNN President Mark Thompson urged staff not to “jump to conclusions,” but the deal’s scale—creating a entity with $60 billion in annual revenue—invites FTC intervention, especially post-Trump antitrust relaxations.

    Wall Street cheered the outcome: Paramount shares (PSKY) leaped 10.04% to $45.20, adding $12 billion to its market cap, while the S&P 500 Media Index rose 1.8%. “This is Ellison’s moonshot—scale to survive in streaming’s endgame,” said MoffettNathanson analyst Michael Nathanson, upgrading Paramount to Buy with a $55 target.

    As regulators deliberate, the merger underscores Hollywood’s consolidation imperative amid cord-cutting and ad market volatility. For Netflix, the retreat preserves cash for originals like “Squid Game” sequels; for Paramount, it’s a bet on IP synergy to challenge Disney’s $200 billion empire. But in an era of media monopolies, questions linger: Will this super-studio foster innovation or stifle diverse voices, especially on global hotspots like Israel-Palestine?

  • Netflix upheld its 2025 forecast, but this might not reflect the confidence it appears to convey

    Netflix upheld its 2025 forecast, but this might not reflect the confidence it appears to convey

    Netflix executives messaged Thursday that all is well with the business in the face of economic turbulence. But its full-year outlook tells a slightly more nuanced story.

    Netflix posted a big beat on operating margin for the first quarter, reporting 31.7% compared with the average estimate of 28.5%, according to StreetAccount. And it guided well above analyst estimates for the second quarter — 33.3% against an average estimate of 30%.

    By its own phrasing, Netflix was “ahead” of its own guidance for the first quarter and is “tracking above the mid-point of our 2025 revenue guidance range.”

    Still, Netflix declined to alter any of its longer-term projections. That suggests Netflix isn’t quite as confident in its second half.

    “There’s been no material change to our overall business outlook since our last earnings report,” Netflix wrote in its quarterly note to shareholders.

    U.S. consumer sentiment is at its second-lowest level since 1952 as President Donald Trump’s new tariff policies roil markets.

    Co-CEO Greg Peters noted during the company’s earnings conference call that Netflix has, in the past, “been generally quite resilient” to economic slowdowns. Home entertainment provides a cheaper form of leisure than most other activities. A monthly Netflix subscription with ads costs $7.99.

    But the question remains how — or whether — an economic slowdown would pinch Americans’ wallets and force higher churn among streaming subscriptions.

    Netflix stopped reporting quarterly subscriber numbers this quarter, so the company will likely not detail if it sees a customer slowdown later this year beyond reporting its underlying revenue and profit.

    First-quarter revenue of $10.5 billion was roughly in line with analyst expectations, while second-quarter guidance of $11 billion is slightly above.

    “Retention, that’s stable and strong. We haven’t seen anything significant in plan mix or plan take rate,” said Peters. “Things generally look stable.”

  • Netflix surpasses expectations for the first quarter, indicating that Trump’s tariffs have not impacted it so far

    Netflix surpasses expectations for the first quarter, indicating that Trump’s tariffs have not impacted it so far

    Netflix fared better than analysts anticipated during the first three months of the year, signaling the world’s largest video streaming service is still thriving as President Donald Trump’s policies cast a pall on the economy.

    The numbers released Thursday indicated Netflix is still building on the momentum that enabled it to add 41 million worldwide subscribers last year—the biggest annual gain in the company’s 27-year history.

    But it’s unclear precisely how many more subscribers Netflix picked up during the January-March period because this report marks the first time that that the Los Gatos, California, company hasn’t provided a quarterly update on its total subscribers.

    Netflix announced last year it would no longer report subscriber numbers beginning with this quarter as the company seeks to shift investors’ focus to its profits after topping 300 million global subscribers in December. As part of that emphasis, Netflix is working to sell more advertising to supplement subscription dollars.

    Netflix’s sharper focus on its finances paid off in this year’s first quarter with earnings of $2.9 billion, or $6.61 per share, a 24% increase from from the same time last year. Revenue climbed 13% from the same time last year to $10.54 billion. Both numbers exceeded forecasts compiled by FactSet Research. Without providing details, Netflix cited ongoing subscriber growth as the main reason for its strong start this year.

    The robust growth came against a background of economic chaos and Trump’s fluctuating trade war. The tech industry has been hit particularly hard by the sweeping tariffs that Trump unveiled April 2 because so many bellwether companies rely on international supply chains that have been provided some relief by temporary freezes and exemptions from the fees.

    But Netflix’s global streaming service hasn’t been touched by Trump’s tariffs yet, making the company a notable exception that has enabled its stock price to increase 9% so far this year, while the market values of most other major tech companies have plummeted.

    “Netflix remains a standout in an otherwise volatile tech landscape,” said Andrew Rocco, a who tracks the stock market for Zacks Investment Research.
    The company’s shares rose nearly 3% in extended trading after its report came out.

    The trade war could still hurt Netflix if it triggers a recession or fuels inflationary pressures as many economists fear. In those scenarios, more consumers may curtail their discretionary spending on entertainment.

    The economic volatility could also result in a slowdown in advertising to the detriment of Netflix’s efforts to sell more commercials for a low-priced version of its streaming service that accounted for most of its last year’s subscriber growth.

    “We’re paying close attention clearly to the consumer sentiment and where the broader economy is moving,” Netflix co-CEO Greg Peters said during a Thursday conference call. “But based on what we are seeing by actually operating the business right now, there’s nothing really significant to note.”

    Peters also said Netflix’s low-cost option, currently priced at $8 per month in the U.S., should help insulate its video streaming service if households start tightening their belts.

    In a sign of its confidence, Netflix reaffirmed its previous prediction for annual revenue of roughly $44 billion, up 13% from 2024.

    “Historically in tougher economies, home entertainment value is really important to consumer households,” Netflix co-CEO Ted Sarandos noted during the conference call.