Amidst Hollywood's most critical merger battle, where bids in billions are nothing but the brightest and fastest to extinguish, Netflix's daring move to acquire Warner Bros. has jolted a new storm. With strategy and stakes placed high, not even a very extravagant box office drama could bring observers into its fold. 

The streaming giant grapples with subscriber loyalty, legacy franchises, and the keys to a legendary kingdom of cinema in the theatre of finance. Here, the risks and rewards are interwined. However, this loud drama is hiding a new silent loan in its shade. 

Netflix’s most daring bet has met with a decision of refinancing to strike a balance. And the number is so big, it needs a breakdown.

Netflix Inc. announced that it has refinanced a portion of its substantial bridge loan, worth $59 billion, in the latest plot twist surrounding the Warner Bros. acquisition. This loan had been planned for the acquisition of Warner Bros. Discovery Inc. at $82.7 billion.

According to Bloomberg, the streaming company revealed in a filing on Monday that it had received a $5 billion revolving credit facility and two $10 billion delayed-draw term loans. Together, they effectively replaced part of the bridge loan taken for the acquisition, thus leaving around $34 billion from Netflix to be syndicated to other lenders. 

The bridging loans, to which Netflix has resorted are short-term financial aids that come into play when companies are in immediate need of capital to make large acquisitions. These type of loan temporarily fills the financing gap when buyout bids lack permanent financing. More permanent and less expensive debt instruments typically replace these loans.

In the case of Netflix, among the banks involved are Wells Fargo, BNP Paribas, and HSBC, which provided the unsecured facility and lent the streaming titan one of the largest bridge loans ever made for a media merger. Netflix’s development from the junk-bond market during the early years of its expansion to having blue-chip credit status in 2023 was vital to obtaining this financing method with reduced borrowing costs. 

What Netflix Would Own if the Warner Bros. Acquisition Becomes Reality

For Netflix, this refinancing is a step towards achieving its long-coveted goal that could have easily fallen into its competitors' laps.

Netflix negotiated a contract to purchase the lion’s share of Warner Bros. assets for about $72 billion equity value (approximately $82.7 billion enterprise value), at $27.75 per share. On the contrary, Warner Bros. rejected Paramount Skydance's hostile $108.4 billion offer, citing inconsistency, its inferiority, and instability. 

Although Netflix has the support of Warner Bros., it faces regulatory hurdles. Democratic Senator Elizabeth Warren of Massachusetts called the bid an anti-monopoly nightmare. However, Netflix has assured that the studios will not be closed.

"Our intentions when we buy Warner Bros. will be to continue to release Warner Bros. studio movies in theaters with the traditional windows," promised Netflix co-CEO Ted Sarandos, per The Hollywood Reporter. 

Whether Netflix is set to secure the future of cinema with this bid or innovate something unpredictable, only time can tell. However, its recent refinancing move has already increased the potential for such an acquisition.

Netflix Steps Up Warner Bros. Deal, Promising Fans to Keep Cinema Alive Amid Paramount’s Bid

What are your thoughts on Netflix's new refinancing move? Let us know in the comments below.