Netflix walks away from 2 deals in 2 months as rivals bulk up

Netflix has walked away from two major acquisition targets in as many months, leaving the streaming pioneer without a deal as rivals Paramount and Fox reshape the media industry.

Netflix walked away from a bid to acquire Roku this week after losing Warner Bros. Discovery to Paramount Skydance, leaving the streaming giant without a major M&A win as competitors consolidate around it.

"We see Netflix's recent earnings report as supportive of the long-term thesis — compounded revenue growth, rising margins and the scope to return capital in an outsized way," Goldman Sachs analyst Eric Sheridan wrote in a note. "Against these long theses, the short-term debate is likely going to stay anchored on themes around engagement trends."

Netflix lost the bidding war for Warner Bros. Discovery in February after Paramount raised its offer to $31 per share, valuing the all-stock deal at $110 billion. The company then lost out to Fox in the race for Roku this week, according to reports. Netflix shares have fallen 27% over the past two months and are down 16% year to date, compared with a 10% gain for the S&P 500.

The failed acquisitions leave Netflix to rely on organic growth and its advertising business at a time when the DOJ has cleared the Paramount-WBD merger, creating a combined entity with Paramount+, Max, CBS and CNN under one roof. Netflix reports second-quarter earnings on July 16, with investors watching for signs that subscriber growth and ad revenue can offset the lack of dealmaking.

A $110 Billion Rival Takes Shape

The U.S. Department of Justice cleared the Paramount-WBD merger on June 12, saying the transaction "is not likely to result in harm to competition or American consumers." Paramount CEO David Ellison has told investors the deal is on track to close by September, after which a ticking fee would require Paramount to pay hundreds of millions to WBD shareholders each subsequent month.

The combined company will unite two century-old Hollywood studios, merging premium streaming platforms Paramount+ and Max, broadcast and cable channels including CBS and CNN, and the Warner Bros. film lot. Paramount shares have lost 22.4% year to date, while WBD has fallen 6.3%.

The deal still faces hurdles. California Attorney General Rob Bonta is preparing an independent lawsuit to block the merger on antitrust grounds, and a coalition of state attorneys general may join. The Los Angeles County Board of Supervisors this week warned the merger could put about 2,495 jobs in Greater Los Angeles and 6,000 globally at risk. The European Union has set a preliminary vetting deadline of July 14, and U.K. regulators are conducting a multi-phased review.

Netflix's Organic Growth Bet

Netflix's retreat from dealmaking comes as the company faces pressure to prove its advertising business can scale. The company declined to raise its full-year 2026 revenue guidance from the $50.7 billion to $51.7 billion range in April, and its operating margin guidance of 31.5% fell short of the 32% analysts had modeled.

The company announced a $25 billion stock repurchase authorization after its first-quarter report, signaling confidence in its standalone strategy. But longtime chairman Reed Hastings stepped down in April, marking the end of an era as the company navigates a consolidating market.

This article is for informational purposes only and does not constitute investment advice.