Netflix's Newest Rival Has Nearly $70 Billion in Annual Sales. It Also Carries About $82 Billion of Debt.

Skydance reported pro forma revenue of $66.1 billion in 2025, but an operating loss of about $2.6 billion and roughly $82 billion of debt at June 30, compared with Netflix’s $45.2 billion of revenue, $13.3 billion of operating income and $14.3 billion of debt. The article argues Skydance’s scale does not necessarily make it a stronger competitor, though its planned streaming-service combination and more than $30 billion in recent content spending could intensify competition for programming. Netflix expects 2026 revenue of $51.0 billion–$51.4 billion and a 31.5% operating margin; the author’s main concern is slowing revenue growth and rising content costs.

Analysis

The key second-order risk for Netflix is not a direct subscriber loss from a larger rival; it is a change in the price and availability of premium content. If the merged company protects exclusivity while competing for the same franchises and sports rights, Netflix’s content-cost growth could converge with revenue growth and cap margin expansion. Conversely, heavy leverage and a multiyear savings target constrain its ability to sustain a bidding war. Debt service may make licensing attractive: Netflix could gain access to useful titles at favorable terms if the rival prioritizes cash generation over exclusivity.

The revenue and subscriber comparisons overstate competitive scale if they include overlapping customers, different accounting scopes, or services not yet integrated. A combined app could improve retention, but migration, product confusion, and content cuts create execution risk. Near term, the deal alone is not a strong reason to change Netflix exposure. Over 1–3 months, watch for evidence of rights-price inflation and management commentary on content amortization; over 6–18 months, the decisive test is whether the rival can integrate services and deliver savings without weakening its slate.

Contrarian read: leverage may make the new competitor a potential content supplier before it becomes a durable price-war threat. The thesis weakens if Netflix’s content costs materially outpace revenue or margin guidance is cut. The supplied identity mapping lists WBD as Warner Bros. Discovery, not the newly named merged entity; verify the current listing and ticker before using WBD as a trading proxy.

Key Decisions for Investors

• No fresh trade solely on the competitor’s reported scale; maintain Netflix exposure rather than shorting it on headline revenue comparisons. Reassess after the next results and guidance update.
• Set an alert for Netflix content amortization growth versus revenue growth and operating-margin guidance. A clear deterioration in that relationship would invalidate the margin-resilience thesis and warrant reducing exposure.
• Track whether the merged company licenses library content broadly or prioritizes exclusivity, alongside observable rights-auction pricing. Broad licensing could benefit Netflix; sustained price escalation would be a negative catalyst.
• Do not treat WBD as a proxy for the merged company without confirming the post-close entity, listing, and ticker against current market data.