Netflix Refinances Part of $59 Billion Warner Bros Bridge Loan

Netflix Inc. has reworked a significant portion of the $59 billion bridge loan it secured to fund its pursuit of Warner Bros. Discovery Inc., replacing short-term financing with lower-cost, longer-maturity debt to strengthen the overall deal structure.

New Credit Facilities Replace Short-Term Funding

According to a regulatory filing, Netflix has put in place a $5 billion revolving credit facility alongside two delayed-draw term loans of $10 billion each. These instruments refinance part of the original bridge loan, leaving roughly $34 billion still to be syndicated among lenders.

Valuation Sets the Stage for a High-Stakes Contest

Earlier in December, Netflix agreed to a transaction that values Warner Bros.’ studio and streaming businesses at $82.7 billion. Soon after, Paramount Skydance Corp. entered the fray with an unsolicited takeover proposal, igniting a bidding battle that is expected to have lasting consequences for the global entertainment sector. Both offers rely on massive debt packages, ranking among the largest financing efforts seen in the industry over the past decade.

Warner Bros. has publicly urged shareholders to dismiss Paramount’s proposal and stand by the agreement reached with Netflix. The company characterized the rival bid, which includes $54 billion in debt commitments, as weaker and riskier, arguing that its financing structure does not offer sufficient certainty.

Regulatory and Political Scrutiny Looms Large

Despite the backing of Warner Bros.’ board, Netflix’s takeover attempt faces political and regulatory resistance. US Senator Elizabeth Warren has criticized the deal as a threat to competition, labeling it an “anti-monopoly nightmare.” In response, Netflix has sought to calm internal concerns, assuring employees that the acquisition would not lead to studio shutdowns.

Bridge loans are commonly used to cover immediate funding needs during large buyouts, providing companies with quick access to capital. These loans are typically temporary and are later refinanced with cheaper, longer-term debt that is distributed among a wider group of lenders.

Why Banks Compete for Short-Term Financing Deals

Although bridge loans are often short-lived, they are valuable to banks because they help cement relationships with major corporate clients and open doors to more lucrative mandates later. With limited deal activity in credit markets recently, competition among banks for these opportunities has intensified.

Wells Fargo & Co., BNP Paribas SA, and HSBC Holdings Plc were among the institutions that supplied Netflix with the original unsecured bridge loan, according to people familiar with the matter.

Maturity Timeline of the New Debt

The newly announced debt will mature in stages. If the Warner Bros. acquisition proceeds, the revolving credit facility will come due in either 2030 or three years after the deal closes, whichever occurs first. The delayed-draw term loans have maturities of two and three years, respectively.

Netflix is expected to further reduce its reliance on bridge financing by accessing the bond markets, extending its debt maturities over time. Given the company’s strong credit profile, any future issuance is likely to carry an investment-grade rating, supported by Netflix’s A3 rating from Moody’s and A rating from S&P Global.

From Junk Bonds to Blue-Chip Borrower

In its early growth phase, Netflix depended heavily on high-yield debt markets to finance expansion. That changed in 2023 when rating agencies upgraded the company to investment-grade status, unlocking access to significantly cheaper and more flexible sources of funding.