Cash is Safer: Why WBD Chose Netflix Over Debt

Warner Bros Discovery has decided that cash is safer than debt, favoring Netflix’s offer over a rival bid. Netflix is reportedly switching to an all-cash structure for its $83 billion acquisition, a move that aligns with WBD’s rejection of a debt-laden hostile bid from Paramount Skydance.
Paramount’s offer stands at $108.4 billion, but it relies on significant leverage. WBD’s board has labeled the bid “inadequate” due to the financial risks. Paramount is now trying to replace the board to force the deal. Netflix’s all-cash proposal offers a risk-free alternative that appeals to the board’s prudence.
The deal focuses on WBD’s studio and streaming assets, including HBO and Warner Bros Pictures. WBD’s linear networks, like CNN and Discovery, are excluded from the purchase. This structure allows shareholders to cash out on the premium assets without taking on the risks of the Paramount deal.
The merger faces opposition from Washington. Politicians fear that a Netflix-WBD giant would control nearly half of the streaming market. This regulatory risk is the only major downside to the “cash is safer” strategy.
Investors seem to agree with the logic. WBD shares rose 1.6% on the news, suggesting that the market values stability over high-risk leverage. The decision highlights the premium placed on liquidity in today’s uncertain economic environment.