Paramount Global acquired Warner Bros. Discovery by increasing its offer by $1 per share, which was less than analysts expected. If the deal closes after September 30, Warner shareholders will receive an extra 25 cents per share each quarter.

Paramount shares rose 8.3% to $12.11 in premarket trading on Friday, building on a 10% gain from the previous session. This happened even though S&P 500 futures fell 0.4% as investors moved away from riskier assets.

Netflix chose not to make a new offer after Warner’s board decided Paramount’s proposal was better, saying the deal was no longer financially appealing. This move allows Paramount CEO David Ellison, who has focused on growing the company’s streaming business since the Skydance-Paramount merger in August, to move forward.

This merger could greatly expand Paramount’s streaming business by increasing its number of subscribers and making it more competitive. Analysts say that combining HBO Max with Paramount+ would create a new streaming service that could compete with Disney and Amazon, though it would still have fewer subscribers and less engagement than Netflix.

Fishman points out that Paramount needs to balance spending on content with managing its debt. The deal is supported by $57.5 billion in loans from Bank of America, Citigroup, and Apollo.

Fishman says the strategy behind the deal was always clear. For Paramount, buying Warner was a way to grow, while for Netflix, it was a chance to reach more viewers. The analyst believes the merger could create a strong competitor by bringing together resources, audiences, and content. However, success will depend on whether management can keep enough financial flexibility to make these changes.