• by Wayne Friedman , Staff Writer, 3 hours ago

Early in the week when news broke that Paramount Skydance would be upping its bid for Warner Bros., Netflix stock responded in a way that some would consider surprising.

Shares for the leading premium streaming company rose around 10%.

The belief was that this was good news, as Netflix would not be encumbered with legacy issues that appear to be still plaguing old-school, big media companies.

Netflix did its best to financially hone its bid for Warner Bros Discovery to just studios and streaming -- and well as being financially disciplined in the bidding process when it came to debt needed.

What remains? For years, Netflix counted on legacy movie and TV studios when it came to their original content production needs -- including NBCUniversal, Warner Bros, Paramount or Sony Pictures. But more recently in building its in-house production infrastructure operations, they are less dependent on these partnerships.

Legacy movie and TV studios deal with Netflix when it comes to specific production services -- perhaps on a ‘frenemy” basis -- because that is still a moneymaking business.

Overall, Netflix is now 80% to 90% independent when it comes to producing and releasing original content. What remains is that it is 30%-40% dependent on production services from legacy studios.

The Paramount-Warner Bros Discovery merger may change the dynamic somewhat from a competitive position.

But for the newly merged Paramount-WBD company, major disruption is coming for the next few years.

The newly merged company will need to make massive layoffs across all levels of the company -- studios/streaming and its cable networks.

In addition, Paramount-WBD favor going forward will have taken on enormous debt -- over $60 billion, and possibly as high as $87 billion to $90 billion.

This is the same financial situation that WBD has been dealing with since it formed the company in a 2022 merger of WarnerMedia and Discovery Inc. -- now at around $30 billion to $37 billion.

In the interim, Netflix's strong marketplace position keeps growing, while trimming back on library product deals from studios. Some estimates are that Netflix could hit 90% exclusive content by the year of 2026, currently around 60%.

What about strength in streaming combinations? For sure, Paramount-WBD and their big streaming brands Paramount+ and HBO Max would be a force to reckon with.

But if you take a look at combined market share of viewing from Nielsen’s January 2026 Gauge for streaming, Netflix still is tops with a 8.8% share. A combined Paramount/WBD market share for all its streaming is 4.7% -- around half that of Netflix.

Paramount-WBD will need to deal with this as well as still highly dependent -- 70% of its cash flow -- from declining linear TV network businesses. Even then some regulatory issues might remain.

Overall from a marketplace perspective, this isn’t all that bad news from Netflix. From Netflix’s continuing perspective from the start is that WBD would have been “nice to have” but not “necessary to have.”

And that is why its stock has been up 20% over the week through mid-day Friday, on the news it might drop out of its WBD merger pursuit.

A different surprise ending to this dramatic, highly public -- and costly -- script.