Netflix plans to acquire Warner Bros. Discovery’s streaming and studios business for a high price of 25 times estimated 2026 EBITDA, which could face challenges with regulatory approval. Shareholders stand to benefit with a mix of cash, Netflix shares, and ownership of the remaining Discovery Global business.

The $83 billion investment by Netflix may be difficult to realize fully due to subscriber overlap with HBO Max. Cost savings are expected to bring the acquisition multiple down, but revenue dyssynergies from overlapping subscribers are a concern. Regulatory approval for the deal remains uncertain.

The White House is reportedly skeptical of the Netflix-Warner Bros. Discovery deal, but cannot unilaterally block it. The administration’s heavy influence could lead to a lawsuit to block the merger, with potential bipartisan support. Antitrust concerns center on the common ownership of major streaming platforms.

Paramount Skydance could still enter the picture with a bid for Warner Bros. Discovery, complicating the acquisition process. Representatives of Paramount Skydance may take another bid directly to shareholders, but the path forward is now more complex and costly.

Read more at Morningstar: Netflix Wins Warner Bros. Auction, but at an Exorbitant Price