Funding the War Machine
The timing of Netflix’s all-cash pivot wasn’t accidental rather it coincided with their earnings report. And if you want to know how they can afford an $82 billion shopping spree, just look at the “fundamentals” the Yahoo Finance article highlights.
Netflix isn’t just growing; they are compounding. The ad tier, once a controversial experiment, is now a money printer. Subscriber growth is steady, but the real story is margin expansion. They are squeezing more profit out of every user while their competitors (like Paramount) are still burning cash just to keep the lights on.
The Irony of “Builders not Buyers”
For years, Netflix famously said they were “builders, not buyers.” They didn’t do big M&A. They built their own studio. They built their own tech.
But these results show why they finally changed their mind. They have built such a powerful engine that they ran out of road. To keep growing at this scale, they need more fuel - more IP, more libraries, more franchises (Harry Potter, Batman). The earnings prove they have the cash flow to buy the fuel; the WBD deal is just them pulling into the gas station.
Paramount is trying to buy WBD to save itself. Netflix is buying WBD because it can afford to. That is a very different negotiation.