Paper vs. Power
There is an old saying in deal-making: “Stock is a promise; cash is a fact.” Today, Netflix didn’t just update a spreadsheet; they slammed a suitcase of cash on the table. By shifting their $82.7 billion bid for Warner Bros. Discovery (WBD) from a mix of stock and cash to 100% cash, they sent a brutal message to Paramount Skydance.
The price didn’t change ($27.75/share), but the quality of the offer did. Paramount has been making noise about their “superior” $30 offer, but their bid is messy - full of debt, regulatory hurdles, and the chaos of merging two declining legacy giants. Netflix, on the other hand, just showed the world what a “fortress balance sheet” looks like.
Removing the Variable
Why make this move now? Because the market has been jittery. Netflix stock had dipped 15% since the original announcement, which meant the “stock” part of their previous offer was shrinking in value every day. Paramount was using that volatility to attack the deal.
By switching to all-cash, Netflix removed the variable. They effectively told WBD shareholders: “Stop worrying about the ticker symbol. Here is the money.” It is a move that only a company with massive free cash flow can make. It transforms a complex merger discussion into a simple wire transfer.