Weekly TikTok Haul Analysis: 12/20/2025

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Netflix has been in the news quite a bit lately, given the bidding war between it and Paramount Skydance for the coveted Warner Bros. However, no matter what happens in this saga of events, the market seems to react negatively toward Netflix.  I happen to think that this represents a great opportunity to buy into Netflix, as I see virtually every single outcome of this deal as a win for Netflix.  

Before we dive into the case for Netflix, it’s important to go over what exactly this deal is for.  This is because the Paramount Skydance and Netflix offers are essentially “apples and oranges”.  Paramount Skydance’s offer is to purchase the entire company, including Discovery, CNN, and all of the cable assets.  Netflix’s offer is to purchase select assets, including Warner Bros. (including existing content and film/television studios), as well as HBO (including HBO Max).  All of the remaining assets, like Discovery, CNN, and the cable television assets, would become a separate publicly traded company, called Discovery Global.

Netflix is one of the foremost competitors in the “streaming wars”, but it has long struggled with “marquis” content.  Although they have their one-off hits every once in a while, like KPop Demon Hunters, Stranger Things, Squid Game, and Ozark, these are certainly the exception, not the rule, for the streaming giant.  One of the most prominent criticisms of Netflix is that a lot of the content that they produce/buy is not of the greatest quality.  

This is where Warner Bros. comes in.  This deal would, of course, come with HBO, which is known for making some of the highest quality pieces of content of all time, from the likes of Game of Thrones and Chernobyl, to classics like The Sopranos and The Wire.  

Additionally, Netflix would gain all Warner Bros. studio assets, which are key to its strategy.  Traditionally, much of the top-tier content that Netflix puts out has been purchased, not produced by the company.  They have long opted to buy high-quality content from other studios and leveraged their unique marketing and distribution to get viewers on board.  For example, KPop Demon Hunters was purchased from Sony for around $465 million, and has since become their most viewed movie on the platform. 

With the acquisition of top-tier studio assets and all of the know-how that comes along with those assets, Netflix would be able to up the quality of its content by a considerable margin, making people more willing to pay for their subscription (and potentially even pay more per month for a subscription).  At the same time, this would cut Netflix’s costs by not having to purchase film rights from one of the largest studios in the world.  In other words, the Warner Bros. acquisition would lend an incredible opportunity to vertically integrate the company!

Becoming a vertically integrated company would present countless cost-saving opportunities, like cutting out the middle man for marquis content, and eliminating licensing fees that they pay to host Warner Bros. and HBO content on the Netflix platform.  Additionally, HBO has struggled with marketing its content (and its streaming platform) for years, something that’s evidenced by the countless name changes for the streaming service in recent years.  Netflix would back both HBO and Warner Bros. with a best-in-class marketing arm, which would likely help grow the underlying assets. 

Warner Bros. Discovery's board recently put out a letter to shareholders, unanimously rejecting Paramount Skydance's $108.4 billion tender offer, while reaffirming their support for the Netflix merger announced on December 5th. The Netflix deal offers WBD shareholders $23.25 in cash plus $4.50 in Netflix stock, along with shares in a new spinoff called Discovery Global. The board cited several concerns with Paramount's competing bid: the Ellison family hasn't provided an equity backstop despite claims of "full backstop" financing, instead relying on a revocable trust with undisclosed assets that can be modified at any time. The board also noted that PSKY's offer isn't binding and can be amended or terminated before completion.

Netflix is backing this deal with a $400+ billion market cap and investment-grade balance sheet, compared to Paramount Skydance's $15 billion market cap and near-junk credit rating. Netflix has also committed to a record $5.8 billion regulatory termination fee, signaling a serious commitment. If WBD were to abandon Netflix for the Paramount deal, shareholders would face $4.3 billion in costs, including a $2.8 billion termination fee to Netflix. 

Although Netflix gaining Warner Bros. and HBO would be incredible for their business, and present countless cost-saving and revenue expansion opportunities, losing the bid wouldn’t be the end of the world for the company.  If Warner Bros. Discovery were to be purchased by Paramount Skydance, Netflix would be $2.8 billion richer, as that’s the fee Warner Bros. would have to pay for terminating the agreement.  

Additionally, it’s rumored that Paramount Skydance is coming back with a “best and final” offer, presumably at a higher price.  In the world of business, increasing the price of an asset (presumably by a considerable margin) for one of your competitors is a win too. A Paramount Skydance takeover of Warner Bros. Discovery would require them to take on even more debt than initially anticipated, which is great for Netflix from a competitive standpoint. 

It’s hard to say definitively whether or not the Netflix deal would pass regulatory scrutiny, given the current administration's ties with the Ellison family.  However, I think there are a couple of things to point to that would suggest the deal should make it through the courts.

If the WBD shareholders accept Netflix’s offer, and this inevitably goes to the courts, I think this is going to be their main arguing point.

According to Nielsen, YouTube has considerably more “TV share” than Netflix, even if you add in the acquisition of Warner Bros.  Netflix has long seen other forms of entertainment (not just streaming companies), like YouTube and video games, as competitive threats, which will help when presenting this evidence in court.

There’s also an argument to be had that Netflix purchasing Warner Bros. would be less intrusive than Paramount Skydance purchasing the entire company.  This is because Netflix doesn’t have major studio assets, and they plan on keeping HBO as a separate entity that can focus on creating incredibly high-quality content.

On the other hand, given the amount of debt that Paramount Skydance would take on, it would need to “gut” WBD and cut down on headcount as much as possible to minimize operating costs and maximize operating leverage.

Lastly, given the current administration, it’s worth noting that in November, one of Netflix’s Co-CEO’s, Ted Sarandos, made a visit to the White House.  Although we don’t know what was discussed during this meeting, given the timing of it, one could assume that Sarandos was getting the “blessing” from the Trump administration on this offer.  This makes me believe that there’s likely to be less friction than anticipated from a regulatory standpoint, if the shareholders of WBD accept the Netflix offer.  

It’s also worth noting that in the last week, Affinity Partners, owned by Trump’s son-in-law, Jared Kushner, has pulled their funding/support for Paramount Skydance.

The recent Warner Bros. saga has presented an interesting win-win opportunity to buy Netflix stock for the long term.  The way I see it, either Netflix gains a chance to vertically integrate and create even higher-quality content, providing exponentially more value to its customers, or it’s paid out a handsome sum of money while making its competitors even further indebted.  I don’t see this as a one to two quarter play, or even a one to two year play - instead, I view this as an incredible opportunity to add one of the highest quality companies in the world for the long-term!

Disclosure: I have recently opened a position in NFLX and plan on adding to the position while the stock price is depressed.