Netflix reported fourth-quarter results that surpassed Wall Street forecasts but tempered its outlook for the coming months. The streaming giant cited rising costs for program spending and the anticipated expenses from its proposed acquisition of Warner Bros. Discovery's studio and streaming assets. This cautious tone spooked investors despite strong subscriber growth.

To fuel its content pipeline, Netflix plans to increase its programming budget by 10% in 2026. The company spent approximately $18 billion on shows and films last year, a figure that would climb further under this expansion. This aggressive investment strategy is designed to retain subscribers and fend off intensifying competition in the crowded streaming market.

The proposed merger with Warner Bros. Discovery would create an entertainment behemoth, combining two of the industry's largest libraries. However, the deal carries significant regulatory and integration risks that could strain Netflix's finances. Investors now watch for details on the transaction's structure and the Federal Trade Commission's review process.