This article first appeared on GuruFocus.
Netflix (NASDAQ:NFLX) shares slid about 5% on Wednesday morning after a Reuters report said the streamer’s largely cash bid for Warner Bros. Discovery (NASDAQ:WBD) would mainly fold HBO Max into Netflix, trimming consumer costs but adding few new subscribers.
Sources say Netflix is targeting WBD’s streaming assets and studio arm, not its linear networks.
Investors worry that if a deal chiefly reduces prices for overlapping customers, the acquisition may offer limited market-share gains.
Paramount Skydance (PSKY) and Comcast (NASDAQ:CMCSA) have refreshed their pitches, people familiar with the auction told reporters, with Paramount tapping Middle Eastern capital and Comcast proposing a tighter NBCUniversal-HBO combination.
Some analysts say the bidding could lift WBD’s value toward about $70 billion, well above its pre-auction level.
Still, questions remain over whether scale and cost synergies translate into stronger subscriber growth or merely margin gains.
The scramble indicates that content factory and studio depth now are nearly as much the theme of streaming consolidation fights as subscriber math and regulatory scrutiny.