Highlights
- Netflix aims to finance its $72 billion USD Warner Bros. acquisition with major new debt, including $59B in temporary bank funding to be replaced by bonds and loans.
- Paramount Skydance’s $108B hostile bid intensifies pressure, while analysts warn of potential ratings downgrades as Netflix’s total debt could rise to about $75B.
- Moody’s affirms Netflix’s A3 rating, citing strong operations and the long-term value of Warner Bros. IP, as the deal positions Netflix for a larger role in global media.
Netflix plans to take on significant new debt to finance its proposed $72 billion USD acquisition of most of Warner Bros. Discovery, Bloomberg reported. The company has secured $59B in temporary bank financing and aims to replace it with a mix of bonds, term loans, and a revolving credit facility.
The move comes as Paramount Skydance launches a hostile offer valuing Warner Bros. at more than $108B, including debt.
Netflix’s financial position is stronger than during its early expansion phase, when it was labeled “Debtflix” for its reliance on junk bonds. Analysts say its investment-grade status gives it room to compete in a bidding war and absorb potential regulatory delays.
Stephen Flynn of Bloomberg Intelligence said, “Netflix’s credit profile really turned around,” noting its shift from high-yield borrowing to investment-grade metrics.
Rising Debt, Ratings Pressure, and Regulatory Risk
Morgan Stanley analysts warned that Netflix’s planned borrowing introduces downside risk, including the possibility of a ratings downgrade to the BBB tier. They advised selling notes due in 2034 and 2054, expecting substantial new issuances.
Moody’s affirmed its A3 rating, citing the strength of Netflix’s operations and the value of Warner Bros.’ intellectual property (IP), while adjusting its outlook to stable.
Bloomberg
Bloomberg Intelligence estimates Netflix’s total debt could reach about $75B if the deal closes, up from roughly $15B now. The firm projects the combined company would generate around $20.4B in EBITDA next year, bringing leverage to about 3.7 times and trending toward the mid-2x range by 2027. Analysts say the company is positioned to reduce debt as revenue and cash flow grow.
Netflix’s renewed reliance on borrowing recalls its pre-pandemic expansion, when it raised funds to acquire streaming rights and build original programming. The company now enters a media consolidation race with far more financial capacity, and the acquisition would secure major franchises, including Harry Potter, HBO, and DC Comics.
If approved, the transaction would reshape the competitive landscape and redefine Netflix’s role in global entertainment.
