Netflix shares fall as revenue appears to stall

After years of expansion, Netflix’s shares dropped more than five percent on Tuesday as the streaming entertainment behemoth said that it anticipated revenue to be practically flat in the current quarter.

In the last three months of last year, Netflix reported a profit of $2.4 billion on $12 billion in revenue; this quarter, it anticipates earning $12.1 billion.

In after-market dealings, shares fell just over 5% to $82.85.

The earnings report was released concurrently with Netflix’s offer to acquire Warner Brothers Discovery (WBD), a major player in the television and film industries.

Netflix on Tuesday revised the terms of the proffered deal to make it all-cash and to provide WBD shareholders more certainty about the transaction, the company said in a release.

The revision is expected to enable a shareholder vote on the deal, backed by WBD’s board, by April of this year.

“The WBD board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators and the broader entertainment community,” Netflix co-chief executive Ted Sarandos said in the release.

“The acquisition will also significantly expand US production capacity and investment in original programming, driving job creation and long-term industry growth.”

Earlier this month, Paramount Skydance announced that it had sued WBD for making an unwanted bid to acquire the CNN parent company.

The goal of Paramount’s lawsuit is to force the WBD board to give shareholders specific information that it believes would improve the perception of its offer.

The lawsuit and a letter from Paramount Skydance CEO David Ellison to WBD shareholders are part of a multi-month-long saga.

The board of television and film major WBD accepted a deal from streaming behemoth Netflix after the company announced in late October that it was open to takeover offers.

WBD formally rejected an offer from Paramount Skydance for the entire company.

The Netflix offer favored by the board does not include buying WBD television properties such as CNN and Discovery, which would belong to a newly created and publicly traded company called Global Networks if the deal is sealed.

“We are committed to seeing our tender offer through,” Ellison said in the letter to WBD shareholders.

“If WBD calls a special meeting ahead of its annual meeting to vote on the Netflix Agreement, Paramount will solicit proxies against such approval.”