Netflix's Cash Pivot: A High-Stakes Gamble to Beat Paramount's Deadline

Netflix is making a high-stakes tactical pivot. The company is preparing to convert its proposed $82.7 billion acquisition of Warner Bros. Discovery's streaming and film assets into an all-cash deal, a move designed to outmaneuver Paramount's aggressive campaign. The original December agreement was valued at $27.75 per WBD share, with an enterprise value of $82.7 billion. That complex package-part cash, part Netflix stock-created a timeline vulnerability. By switching to all-cash, Netflix aims to expedite the shareholder vote timeline, potentially moving it to late February or early March from the original spring or summer schedule.

This is a direct response to a looming deadline. Paramount's hostile $30 per share all-cash tender offer is set to expire on January 21. Netflix's pivot is necessary to force a decision before Paramount can solidify its proxy fight. The move neutralizes Paramount's key argument that its cash offer is "simply more" than Netflix's stock-backed package, while also sidestepping the months of financial disclosures that stock deals require.

The risk is immediate and costly. To fund this accelerated, all-cash bid, Netflix will need to draw down on its bridge loan. This forces a significant, upfront cash outlay at a time when the market is pricing in uncertainty. The stock is trading at $28.91, above Netflix's offer but below Paramount's, reflecting this volatile race to close. The setup is now a pure cash battle, and Netflix's ability to fund it without straining its balance sheet will determine if this tactical gamble pays off.

The Financial Mechanics: Risk and Leverage

The all-cash pivot fundamentally changes the deal's financial mechanics. The original structure was a hybrid: WBD shareholders were to receive $23.25 in cash per share, plus Netflix stock worth approximately $4.50. That stock component was a direct bet on Netflix's own share price, which has fallen nearly 12% since the deal was announced. By eliminating it, Netflix removes a major source of uncertainty and volatility from the offer's implied value. It also neutralizes Paramount's central argument that its $30 all-cash offer is "simply more" than a package tied to a declining stock.

Financing this accelerated move requires drawing down on Netflix's massive bridge loan. The company has lined up a $59 billion bridge facility from Wall Street banks. It has already refinanced about $25 billion of that with longer-term debt, leaving roughly $34 billion to be syndicated from the original bridge. This is the cash Netflix must now commit to fund the entire $82.7 billion bid. The risk is that this immediate, large-scale drawdown strains liquidity and increases leverage, even if Netflix's balance sheet remains robust.

The procedural advantage is the core tactical goal. By simplifying the offer to all-cash, Netflix aims to expedite the shareholder vote timeline. The revised deal could push the vote to late February or early March, a critical move to beat Paramount's January 21 tender offer deadline. This compressed schedule limits the time for Paramount's proxy fight to gain traction and forces a decision before its campaign can solidify. The gamble is clear: Netflix is using its financial muscle to outspend and outmaneuver a rival, betting that its stronger credit and faster process will win the day.

The Battlefield: Shareholder Dynamics and Legal Maneuvers

The battlefield is now a three-way fight, with shareholders caught between competing offers and a legal skirmish over disclosure. Warner Bros. Discovery's stock price of $28.91 captures the market's uncertainty, trading above Netflix's $27.75 offer but below Paramount's $30 hostile bid. This spread is the clearest signal of the volatility and decision paralysis the entire process is creating.

Warner is fighting back in court, calling Paramount's legal push "urgency theatre." The company argues that Paramount-rather than WBD-is asking stockholders to act now and that the real urgency is Paramount's own tender offer, which it can unilaterally extend. WBD contends the motion is premature, as the Netflix merger proxy hasn't been filed yet. The Delaware Chancery Court will hear Paramount's request for an expedited trial on Thursday, a key procedural hurdle.

Paramount's strategy is aggressive and multi-pronged. It has filed a suit seeking disclosure to help shareholders make an informed decision, while also planning to nominate directors for election at the WBD 2026 Annual Meeting who would be tasked with exercising WBD's right under the Netflix agreement to engage with Paramount. This dual approach-legal pressure and a proxy fight-aims to force a vote before Netflix can close its accelerated deal.

The setup is a classic race against time. Netflix's all-cash pivot is designed to win the shareholder vote before Paramount's proxy fight gains momentum. But Paramount is using the courts to delay and pressure WBD into revealing more, hoping to sway shareholders with its "superior" cash offer. The outcome hinges on which side can better convince WBD's board and its stockholders that its deal is not only more valuable but also more certain to close.

Catalysts and Risks: The Path to Closing

The immediate path to closing is now a race against a hard deadline. The critical near-term catalyst is the shareholder vote. Netflix's all-cash pivot is explicitly designed to accelerate this vote to as early as late February or early March, a move intended to beat Paramount's tender offer expiration on January 21. If Netflix can secure that vote before the 21st, it effectively locks in the deal and neutralizes Paramount's campaign. The company's financial firepower gives it a procedural edge, but the clock is now ticking.

The primary financial risk is the immediate strain on Netflix's balance sheet. Converting to all-cash forces the company to draw down on its remaining bridge loan. While Netflix has already refinanced part of the $59 billion facility, about $34 billion remains to be syndicated. Committing this capital upfront increases near-term leverage and consumes a massive portion of its liquidity, even if the company's investment-grade credit rating provides a cushion. This is a high-cost gamble for speed.

Ultimately, the deal's outcome hinges on a single question: will WBD shareholders accept the Netflix offer before Paramount's tender expires? The stock's current price of $28.91 sits in a volatile gap between the two bids, reflecting the uncertainty. Netflix's strategy is to make its offer simpler and faster, hoping its stronger credit and expedited timeline will win over the board and shareholders. Paramount's counter is to argue its cash is "simply more" and to use legal and proxy pressure to delay. The next few days, culminating in the shareholder vote, will determine which side's narrative prevails.