Netflix stock slides on doubts about its takeover of Warner

Bid by Paramount, regulatory worries, weaker viewing trends cloud acquisition.

- BY WENDY LEE

Netflix shares dipped Monday after Paramount announced a hostile takeover bid of Warner Bros. Discovery, fueling worries on Wall Street that the streaming giant may not be able to pull off its audacious acquisition.

Netflix stock closed down nearly 3.5% to $96.79 a share after Paramount moved to take its case directly to Warner Bros. Discovery shareholders, offering $30 a share in a deal valued at $78 billion for the whole company. Last week, Netflix said it reached an agreement with Warner Bros. Discovery to buy its film and TV studios, Burbank lot, HBO and HBO Max for $27.75 a share, a $72-billion offer. Netflix would also take on more than $10 billion in Warner Bros. debt, for a deal value of $82.7 billion.

On Monday, analyst Jeffrey Wlodarczak, chief executive of Pivotal Research Group, downgraded his rating on Netflix stock from buy to hold, citing concerns that Paramount's bid could increase the price Netflix could pay for the Warner Bros. Discovery assets. Regulatory issues may also change the terms of the deal, such as Netflix giving up HBO to a rival, Wlodarczak said. “The question is, what modifications might they have to make?” he said.