Background on Netflix and Warner Bros. Discovery
Netflix, a leading global streaming service, is preparing for one of the largest media industry mergers in history by refinancing part of its $59 billion bridge loan. This move aims to support the potential acquisition of Warner Bros. Discovery’s film and television studios, as well as its streaming assets.
Details of the Refinancing
According to a regulatory filing on Monday, Netflix secured a $5 billion revolving credit line and two $10 billion delayed-draw term loans. This leaves approximately $34 billion of the bridge loan available for syndication.
- The funds will be used to cover the cash portion of the deal, related commissions and expenses, as well as refinancing and general corporate purposes.
- Netflix won a competitive bidding process, surpassing rival offers, including an unsolicited $108.4 billion cash bid from Paramount Skydance for the entirety of Warner Bros. Discovery.
- Despite Paramount’s offer providing immediate higher value, Warner Bros. Discovery’s board supported the Netflix deal, citing superior strategic benefits and financing security.
- The expected acquisition, which includes HBO and HBO Max, is anticipated to close after Warner Bros. spins off its Global Networks unit in Q3 2026.
Warner Bros. Discovery’s Plans for Divestiture
Warner Bros. announced the divestiture in mid-2025 to separate high-growth streaming and studio assets from its legacy networks, enabling each business to follow focused strategies and unlock value for shareholders.
Netflix initially obtained a $59 billion bridge loan on December 4 to secure financing for its Warner Bros. Discovery offer.
Bridge Loans Explained
Bridge loans are typically used to provide short-term financing for large transactions, which are then replaced by longer-term, lower-cost debt.
Key Questions and Answers
- What is the purpose of Netflix refinancing part of its bridge loan? Netflix aims to support its potential acquisition of Warner Bros. Discovery’s film and television studios, as well as its streaming assets.
- What does the refinancing entail? Netflix secured a $5 billion revolving credit line and two $10 billion delayed-draw term loans, leaving around $34 billion of the bridge loan available for syndication.
- Why did Warner Bros. Discovery choose Netflix over other bidders? Although Paramount’s offer provided immediate higher value, Warner Bros. Discovery’s board supported the Netflix deal due to superior strategic benefits and financing security.
- When is the expected closing date for the acquisition? The acquisition, which includes HBO and HBO Max, is anticipated to close after Warner Bros. spins off its Global Networks unit in Q3 2026.
- What is the reason for Warner Bros. Discovery’s divestiture plan? The separation aims to isolate high-growth streaming and studio assets from legacy networks, allowing each business to follow focused strategies and unlock value for shareholders.
