What to Expect From Earnings Amid Netflix-Paramount War for Warner Bros.

With Netflix shares down almost 15% since making its initial bid for Warner Bros.’ studio and streaming business and now embroiled in an escalating bidding war with Paramount for the legendary media company, co-CEOs Ted Sarandos and Greg Peters face a ton of questions.

This afternoon, Wall Street will get its first chance to grill Netflix’s leadership since the streamer revised its $83 billion deal to all-cash when it reports its fourth-quarter results. It also comes as Paramount is suing Warner Bros. Discovery and has threatened to launch a proxy battle as it seeks to thwart the Netflix deal with a $108.4 billion hostile takeover. The tender offer will expire on Wednesday at 5 p.m. ET, though that deadline is expected to be extended.

Netflix’s earnings report, with investors half-paying attention to its financial results and half-probing the state of the battle with Paramount, underscores a central theme that will play out during this quarter’s earnings season, with M&A questions and the ramification of any Warner Bros. deal sure to be a topic brought up on virtually every media earnings conference call.

Gabelli Funds analyst Hanna Howard told TheWrap that the companies’ fundamentals “probably aren’t going to be huge drivers of these stocks in the near term” until the saga is resolved, but that doesn’t mean investors won’t be looking at how these businesses will seek organic long-term growth separate from any deal (after all, there’s bound to be one loser walking away with nothing).

Elsewhere, investors will be keeping a close eye on Comcast plans for growth post-Versant spin. They’ll also be looking for positive trends in Disney’s streaming and theme parks businesses and more color about its OpenAI partnership and Fubo acquisition. 

Here’s everything you need to know:

A critical metric in the bidding war

With Paramount escalating its fight for Warner Bros. Discovery with a lawsuit and threat of a proxy war, all eyes will be on the asset that David Ellison believes is essentially worthless: the cable assets.

Ellison has accused WBD’s board of withholding key information about how it valued Netflix’s $83 billion deal and the proposed cable network spinoff Discovery Global, which he says is depriving stockholders of the ability to evaluate its risk or meaningfully compare it with Paramount’s $108.4 billion tender offer. 

“If I’m looking to pick one metric, one snapshot for this earnings season, I’d be looking at [the results of] Warner’s global linear networks business,” Third Bridge senior analyst John Conca told TheWrap. “That’s the biggest storyline. If you show a positive number, that obviously gives you a stronger base for the multiple and crystallizes the argument that these assets deserve a premium.”

Netflix revised its $27.75 per share bid to all-cash after its stock price has fallen below the collar in its original cash-and-stock deal. The deal also includes any additional upside from the Discovery Global spinoff, which is set to take place in six to nine months.

In a new regulatory filing on Tuesday, WBD valued Discovery Global’s equity between as little as $1.33 per share and as high as $6.86 per share in the event the company is acquired following the separation. The new Netflix deal also reduced the amount of Warner’s debt being placed on Discovery Global by $260 million due to better-than-expected cash-flow performance of the business last year.

Under its revised all-cash deal with Netflix, the amount of Warner’s debt being placed on Discovery Global was reduced by $260 million due to better-than-expected cash-flow performance of the business last year. Discovery Global is expected to have $17 billion in debt as of June 30, 2026, which will decrease to $16.1 billion by the end of 2026.

Regardless of how the lawsuit plays out, the process will likely drag on throughout 2026 and potentially beyond. Both bids have faced concerns from consumer advocates, Hollywood creatives and unions and lawmakers on Capitol Hill alike and would need to clear shareholder votes and reviews with both U.S. and international regulators, including the Department of Justice and European Commission. Netflix has said its deal would close within 12 to 18 months, while Paramount says it would close a potential deal within a year. 

Though some shareholders have expressed support for the Ellisons’ bid, less than 400,000 shares were validly tendered as of Dec. 19. Paramount is expected to extend the deadline, which is set to expire Wednesday at 5 p.m. ET — a day after Netflix reports its quarterly earnings. There’s also the possibility that Ellison raises his bid above $30 per share, though he has held firm against doing so thus far.  

Paramount has said its latest offer was not “best and final,” but has thus far stood firm on not increasing its bid. If it does end up increasing its bid, Netflix has the opportunity to counter.

“If Netflix raises its bid in order to stave off Paramount, then we’d expect some incremental downside,” Deutsche Bank analysts Bryan Kraft and Benjamin Soff said in a note to clients.  “Whether Netflix raises its offer or acquires Warner at the current price, we’d expect muted stock performance between signing and closing of the deal.” 

Can Netflix, Paramount and WBD continue to grow absent a merger?

Outside of the bidding war, Wall Street will be looking for signs that Netflix, Paramount and WBD can continue to find ways of accelerating growth absent a merger. 

Netflix has expanded its ad-supported tier, which boasts 190 million monthly active viewers, and expects to double ads revenue for 2025. It also is making a push into video podcasts, striking deals with Spotify and iHeartMedia, and has been ramping up its gaming and live event offerings. Wedbush Securities analyst Alicia Reese expects Netflix’s ads business to drive revenue growth in 2026, with “significant opportunities” in 2027. 

“With increasing content spend across movies, serial content, games, live events and podcasts, Netflix must demonstrate soon that its ad program can accelerate growth to justify the higher spend,” Reese said. “Netflix can accelerate ad revenue contribution for the next several years by enhancing ad targeting and interactivity, expanding ad partnerships and adding purchasing capabilities.”

For Paramount Skydance, investors will be looking for any changes to the company’s 2026 outlook and capital allocation plans, as well as updates on its strategic priorities. The company previously said it would invest in excess of $1.5 billion in content in 2026, look to boost its cable brands’ digital presence and improve its tech capabilities by embracing Oracle cloud services, AI and more. It is also targeting $3 billion in cost cuts. 

“We continue to believe Paramount can be a long-term winner if it can focus on dramatically ramping content investment, internally and externally, to drive engagement, rebuild the back-end and UI/UX and discovery algorithm of Paramount+, and ramp the level and creativity of digital marketing spend,” Lightshed Partners analyst Rich Greenfield wrote in a blog post. “None of that requires overlevering and stretching to buy WBD.”

As for Warner Bros. Discovery, Howard will be listening for updates on streaming profitability and expects continued subscriber growth driven by HBO Max’s international expansion. She also expects weakness on the linear network side, driven by cord-cutting and the loss of the NBA. 

Though Warner is on track to reach its profitability goals for the studio and streaming businesses, Guggenheim Securities analyst Michael Morris warned that the bidding war has brought the company’s stock to levels that “offer limited upside to existing offers, introducing deal execution risk and an uncertain timeline to close.” 

“Investors should await either a higher competing bid or greater clarity on deal completion before adding to positions,” Morris said.

What’s next for Comcast post-Versant spin?

While Netflix and Paramount duke it out for WBD, investors will be looking to Comcast for its plans to accelerate growth following the closing of cable network spinoff Versant earlier this month. 

Though the NBCUniversal parent was also a bidder, co-CEOs Brian Roberts and Mike Cavanagh chose to move on after the Netflix deal was announced. While acknowledging a WBD deal would’ve been an “interesting play” for global scale at Peacock, Cavanagh said the company has a “damn good hand” already, touting “unique” media ambitions combining its theme parks, broadcast TV, film and TV studios and streaming.The streamer, which remains well behind its competitors on the subscriber front, is still unprofitable but is narrowing its losses.

“If you’re selling this narrative that this is going to be the future and this is going to generate cash, investors are going to be clamoring to see that,” Conca said. “They are also a connectivity company and we’re ways away from stabilization on the subscriber base side. That’s going to drag the stock in general, so people are really going to be wanting to see profitability in streaming.” 

Bank of America analyst Jessic Reif Ehrlich believes that Comcast’s media assets are being significantly undervalued by the market and that when looking at its Versant spin, its willingness to merge with another media company and the current bidding war for WBD,  it’s time to take strategic action through a spin-off of NBCUniversal. 

“The market is currently valuing Comcast essentially as a cable utility, assigning little value to the world-class media and theme park assets embedded within NBCUniversal,” Ehrlich said in a note to clients. “With the successful launch of Epic Universe in May 2025 and Peacock approaching Ebitda breakeven, the timing for a strategic separation could be ideal.”

Ehrlich believes that an NBCU spinoff would allow Comcast to be a pureplay connectivity company, and give it the regulatory and strategic logic to pursue a merger with Charter Communications, which would create synergies and the ability to command a higher multiple. Charter is notably already pursuing a $34.5 billion merger with Cox as the two companies look to scale up. 

“It has long been our view that the media industry needs to undergo another wave of consolidation,” she wrote. “The inherent challenges in the streaming business model are creating challenges for sub-scale media companies to fully recoup the lost economics of the linear TV ecosystem. The industry has been anticipating this moment, and we believe 2026 will likely see multiple transactions.”

Can Disney keep streaming and parks growth going? 

When it comes to Disney, Wall Street will be primarily focused on growth in its streaming business, looking for positive trends from the impact of price hikes in October and the launch of ESPN Unlimited in August.   

“For Disney’s stock to decisively break out of its long-standing trading range, investors need renewed confidence that DTC revenue growth and profitability still have meaningful runway,” MoffettNathanson analyst Robert Fishman wrote in a note to clients. “Fiscal year 2026 should mark the year in which Disney demonstrates that improvements in platform technology, combined with a stronger content slate and its unparalleled content library, can drive renewed momentum at Disney+ in the near to medium term — while laying the foundation for durable, long-term growth.  That said, Disney still has work to do to improve engagement in the United States.”

In addition to trying to capture cord nevers with ESPN Unlimited, Disney+ and Hulu are on track to combine into a unified app experience later this year. Starting this quarter, Disney will also follow Netflix’s lead in scrapping quarterly subscriber disclosures for the streaming services. Wall Street will also be looking for more color around the company’s partnership with OpenAI, its acquisition of Fubo.

Additionally, investors will also be paying close attention to how Universal’s Epic Universe is impacting trends at Disney’s Florida theme parks and how geopolitical factors are weighing on attendance overseas. 

“We expect the Parks segment to continue demonstrating strength in the coming years as Disney’s $60 billion investment plan increasingly translates into tangible new offerings,” Fishman added.  “In the long term we believe that continued investment across all Orlando theme parks — including Epic Universe — will encourage increased visitation to the region and ultimately prove to be a tailwind to WDW attendance.”

Wall Street is also awaiting an update on Disney CEO Bob Iger’s successor. Many outside observers see the process as a two-horse race between Disney Entertainment co-chair Dana Walden and Experiences chairman Josh D’Amaro, but the company has also reportedly considered a co-CEO model. The announcement is slated for early 2026, with Iger set to step down at the end of the year.

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