Shares of Netflix (NFLX 0.15%) rose on Wednesday, as it became more likely that its pending acquisition of Warner Bros. Discovery's (WBD 0.56%) film studios and HBO Max streaming service could fall through.
By the close of trading, Netflix's stock price was up nearly 6%.
Image source: Netflix.
Paramount to the rescue
Netflix is locked in a fierce bidding war with media conglomerate Paramount Skydance (PSKY 0.40%). The battle drove Netflix's offer price for WBD's assets up to an enterprise value of nearly $83 billion, or $27.75 per share.
Many Netflix shareholders aren't keen on the price. The streaming leader's stock price is down by about 20% since its acquisition announcement on Dec. 5.
NASDAQ: NFLX
Key Data Points
Yet on Tuesday, Paramount upped its all-cash bid for the entirety of WBD to $31 per share. Paramount also agreed to pay a $7 billion breakup fee if the merger is blocked by regulators, as well as the $2.8 billion breakup fee that WBD would need to pay Netflix if it exited their merger agreement.
Later on Tuesday, WBD's board of directors said that Paramount's latest offer "could reasonably be expected to lead to a company superior proposal." However, it noted that a determination had not yet been made.
Regulators to the rescue
On Wednesday, news broke that attorneys general from 11 states asked the U.S. Department of Justice to begin an extensive review of Netflix's acquisition of WBD's assets, citing the potential for reduced competition among streaming service providers.
Together with Paramount's raised buyout offer, these heightened regulatory hurdles could prompt Netflix to walk away from its pursuit of WBD's streaming assets. That would likely be welcome news to many Netflix investors.
