Imagine holding one of your favorite stocks for years, riding every twist of its incredible growth story, only to wake up one morning and decide it’s time to sell almost all of it. That’s exactly what happened on Friday when one of the most respected voices in finance made a move that left a lot of people scratching their heads.
Josh Brown, the outspoken CEO of Ritholtz Wealth Management and a guy who’s been pounding the table on Netflix for longer than most of us can remember, announced he had cut his personal position in the streaming giant by a staggering 85%—practically overnight.
Why now? Because Netflix just dropped the biggest bombshell in media M&A history: a $72 billion deal to swallow major pieces of Warner Bros. Discovery, including its legendary film studio and streaming platform. And while plenty of investors are cheering the strategic brilliance, Brown sees something very different—a long, messy regulatory battle that could freeze his capital for months, maybe years.
A Classic Case of Opportunity Cost in a Fast Market
Let’s be honest: most of us would look at this deal and think “Wow, Netflix just became the undisputed king of content.” More movies, more series, more pricing power—sounds like a slam dunk, right?
Josh Brown sees the exact same upside. In fact, he still loves the stock. He still thinks it’s a tremendous value. He even said on air that he loves the deal itself and that keeping Warner’s crown jewels away from rival bidders is strategically brilliant. So if he loves everything about it, why on earth is he selling?
The answer boils down to one of the oldest concepts in investing that too many people forget: opportunity cost.
“I can’t sit for a year and watch this become a political football and tie up capital.”
Josh Brown on CNBC’s Halftime Report
In plain English: even if Netflix wins the deal and emerges stronger in 2027, Brown believes there are dozens of other ideas right now that can make money much faster while Washington tears this transaction apart in slow motion.
The Regulatory “Meat Grinder” Nobody Wants to Talk About
Let’s not sugarcoat it—this is the largest media merger proposed since the pandemic, maybe ever when you adjust for inflation and market power. A single company would control an enormous slice of both production and distribution. That’s the kind of thing that makes antitrust enforcers salivate.
Think about the current climate in Washington. Regulators have been blocking or heavily conditioning deals that are a fraction of this size. The FTC and DOJ are practically competing with each other to look tough on Big Tech and Big Media consolidation. Add in the fact that we’re heading into an election year, and suddenly every lawmaker wants a soundbite about “protecting competition” or “saving local journalism” or whatever the talking point of the week is.
Brown’s colorful phrase—“the Eye of Sauron”—perfectly captures it. Once regulators lock their gaze on something this big, the process becomes excruciating. Discovery, remedies, lawsuits, appeals… it can drag on forever.
- Best case: 12–15 months to close
- Realistic case: 18–24 months with concessions
- Worst case: blocked outright or broken up by court order
During that entire period your capital is essentially hostage. Sure, you might collect a modest spread if you play merger-arb, but Brown isn’t a hedge fund running arb books—he’s a growth-oriented investor who wants his money working hard every single day.
What the Deal Actually Means for Netflix Fundamentals
Even if the deal closes cleanly (and that’s a big if), the integration itself creates near-term headwinds most bulls are glossing over.
First, Netflix will be taking on debt or issuing equity—probably a mix of both—to fund a $72 billion transaction. That instantly changes the capital structure and raises the cost of capital.
Second, management attention will shift from aggressive global subscriber growth and original content creation to the monumental task of merging studios, back catalogs, tech stacks, and cultures. We’ve seen time and again how mergers distract even the best executive teams.
Third, capital expenditures don’t disappear—they explode. Combining Warner’s traditional studio lot with Netflix’s cloud-based infrastructure is not a flick-of-the-switch project. Expect higher spending for longer than anyone is modeling right now.
All of this happens while competition is arguably the fiercest it’s ever been. Disney, Amazon, Apple, YouTube, and now potentially a re-energized Paramount or NBCUniversal are not standing still. Any slowdown in Netflix’s innovation pace gets punished immediately.
Reading the Price Action Like a Pro
Friday’s tape told the real story. Warner Bros. Discovery shares jumped nearly 5%—investors celebrating getting $27.75 in cash or stock for a name that’s been left for dead. Netflix shares? Down 4% and threatening the 200-day moving average.
That’s the market’s immediate verdict: great for Warner holders, questionable timing and price for Netflix buyers. And professional investors like Brown read that tape instantly.
In my experience, when the acquiree’s stock pops and the acquirer’s stock drops on announcement day, it’s usually a yellow flag. The bigger the deal, the brighter that flag glows.
What Josh Brown Actually Kept—and Why It Matters
Here’s the part most headlines missed: he didn’t go to zero. He kept a small “toe-hold” position—his words, not mine.
That tells you everything. This isn’t some bearish epiphany where he suddenly hates the company. This is pure portfolio management discipline. He’s saying: I still want to own the ultimate outcome, but I refuse to have serious money riding through the uncertainty.
It’s the difference between being a fan of the team and betting your rent money on this Sunday’s game. Smart investors can do both—they just keep the bet size appropriate to the risk.
Three Takeaways for Regular Investors
- Big M&A isn’t always bullish for the acquirer’s stock in the short-to-medium term—even when it’s strategically brilliant.
- Regulatory risk is real and often underpriced until the subpoenas start flying.
- Sometimes the best trade is the one you don’t make—letting cash sit on the sidelines while everyone else piles into a “sure thing” story.
I’ve been doing this long enough to have lived through AOL-Time Warner, AT&T-Time Warner (again), Sprint-T-Mobile, and countless others. The pattern is painfully consistent: the strategic logic is usually sound, but the journey from announcement to synergy is littered with landmines.
Perhaps the most interesting aspect of Brown’s move is how contrarian it feels in real time. Everyone else is debating whether the deal gets done and who wins the streaming wars in 2030. He’s focused on where he can make money in 2026.
In a world obsessed with ten-year theses, sometimes the highest-conviction move is the decidedly short-term one.
So will he be proven right or wrong? Only time will tell. But one thing’s for sure: when a battle-tested investor with his track record makes a dramatic sizing change the very same day news breaks, it pays to sit up and listen.
Sometimes the smartest thing you can do is admit that even a great story can have a terrible chapter—and be willing to skip it.
