By Harshita Mary Varghese and Anhata Rooprai
Jan 16 (Reuters) – Netflix’s plans to accelerate revenue growth by buying Warner Bros will be in focus on Tuesday when it reports fourth-quarter results, as the streaming pioneer battles Paramount for one of the most prized studios in Hollywood.
A strong lineup of originals, including the final season of hit TV series “Stranger Things”, the latest “Knives Out” movie, and Christmas Day National Football League games, are expected to power the best holiday-quarter revenue growth since 2020.
But investors are looking ahead and Netflix has yet to see meaningful returns from two of its most costly bets – pushes into advertising and videogames. The end of “Stranger Things”, its most-watched show ever, also leaves a hole that Netflix may turn to Warner Bros to fill.
Its $82.7 billion pursuit of Warner Bros’ streaming and studio assets would provide Netflix with a prized content library that includes “Friends”, “Game of Thrones” and “Harry Potter”.
Netflix, which has built fewer blockbuster franchises than rivals like Disney, can tap the cultural clout of the titles to come up with a new generation of streaming-tailored spin-offs, prequels and sequels. Investors will want to know how.
Tuesday’s earnings call with analysts will be Netflix’s first since it announced the deal on December 5.
“The earnings will be overshadowed by what Netflix says about the deal … what’s next and the questions around it,” PP Foresight analyst Paolo Pescatore said.
Netflix has been locked in a heated battle with Paramount Skydance, which has offered $108.4 billion for all of Warner Bros Discovery including cable assets that Netflix doesn’t want.
The race is expected to drag on for months as both companies try to sway investors, with Netflix planning to switch its cash-and-stock deal into an all-cash offer, Reuters has reported. Strong regulatory scrutiny in the U.S. and Europe is also likely.
Buying Warner Bros would make Netflix the biggest global streamer by far with about 428 million subscribers. Investors are going to want to understand why that won’t fall afoul of antitrust rules — Netflix believes it is competing with YouTube, America’s most-watched TV distributor, although regulators may be skeptical, Reuters has reported.
Uncertainty over the outcome has piled pressure on the Netflix stock, which has declined for four straight months and marked a weak start to 2026 with a 6% fall. Nearly a third of the analysts covering the shares have lowered their targets since the deal announcement.
The upside for Netflix of the HBO acquisition is potentially stabilizing subscriptions, whether the services remain separate or together. Netflix has the industry’s lowest cancellation rate and could stem user losses at HBO Max by bundling the services and deploying its recommendation engine, among other plans the company could lay out after results.
LIVE EVENTS FUEL EARNINGS
As for the results themselves, analysts expect that live events will play a more central role in driving revenue by attracting and retaining viewers.
The Detroit Lions vs Minnesota Vikings match on Netflix on Christmas Day broke records to become the most streamed game of the major league sport in the U.S. The streamer also recently expanded its U.S. WWE rights to include the historical library.
Its overall revenue likely rose 16.82% in October to December to $11.97 billion, slightly slower than the 17.2% growth in the previous quarter, according to data compiled by LSEG.
Analysts project about 13% revenue growth for Netflix in 2026.
Although the company stopped sharing subscriber figures a year ago, Visible Alpha estimates net additions of around 10 million, ending the year with more than 327 million users.
(Reporting by Harshita Mary Varghese and Anhata Rooprai in Bengaluru; Editing by Devika Syamnath)
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