Netflix, once notorious for its aggressive debt-fueled expansion, is preparing for another massive borrowing spree as it moves forward with its planned $72 billion acquisition of most of Warner Bros. Discovery. Though the company has shed much of its old “Debtflix” reputation by building a stronger post-pandemic balance sheet, the streaming giant is expected to take on “tens of billions of dollars” in fresh debt to secure the deal. Analysts say this financial muscle could allow Netflix to outbid rivals while still maintaining its investment-grade credit status.
The current financing structure includes $59 billion in temporary debt arranged by major Wall Street banks, which Netflix plans to replace with a mix of $25 billion in bonds, $20 billion in delayed-draw term loans, and a $5 billion credit facility. Part of this amount will eventually be paid off through the company’s growing cash flow. However, the situation has intensified after Paramount Skydance launched a hostile bid valuing Warner Bros. at over $108 billion, potentially forcing Netflix to raise its offer amid what could become a fierce bidding war.
Financial analysts warn that such a dramatic rise in debt could pressure Netflix’s credit ratings. Morgan Stanley experts noted that Netflix, currently graded A by S&P and A3 by Moody’s, risks slipping back into the BBB range if its leverage spikes. They have advised investors to reduce exposure to certain long-term Netflix bonds in anticipation of potential downgrades. Beyond ratings concerns, the company must navigate complex antitrust scrutiny and risks incurring a $5.8 billion breakup fee if regulators block the deal.
Also Read: ‘Too Much Power in One Place’: Trump Flags Antitrust Risk in Netflix–Warner Mega Deal
Despite these challenges, investor sentiment has remained relatively calm. Moody’s reaffirmed Netflix’s rating this week, citing the company’s strong operating performance and the massive strategic value of Warner Bros.’ intellectual property, including Harry Potter, HBO, and DC Comics. Bloomberg Intelligence estimates that Netflix’s debt could rise to about $75 billion if the deal closes, compared to roughly $15 billion today. Even then, projections suggest Netflix will generate $20.4 billion in EBITDA next year, keeping leverage around 3.7x before falling to the mid-2x range by 2027—comfortably within investment-grade norms.
Netflix’s renewed appetite for borrowing recalls its pre-pandemic strategy, when the company relied heavily on junk bonds to build its original-content empire. Between 2009 and 2020, Netflix amassed more than $18.5 billion in debt while funding hit shows like Stranger Things and House of Cards. Critics mocked the company as “Debtflix,” but the pandemic vindicated its aggressive bets as streaming demand surged worldwide. With free cash flow now topping $6.9 billion annually and multiple credit upgrades secured, analysts say Netflix is better positioned than ever to execute a deal of this scale.
Industry experts believe the company’s improved financial profile gives it the ability—and the credibility—to pursue one of the largest media acquisitions in history. “Netflix has earned the right to take on an acquisition of this size,” said Jim Fitzpatrick of Allspring Global. With the battle for Warner Bros. intensifying, Netflix’s willingness to reembrace debt may determine whether it dominates the next era of global entertainment.
Also Read: Netflix Deal Could Make Warner CEO David Zaslav a Billionaire Overnight