Netflix Inc. (NFLX) shares took a hit Thursday following reports that the streaming powerhouse has emerged as the primary bidder for Warner Bros Discovery (WBD) assets. The market's reaction? Concern about what this potential mega-deal could mean for Netflix's balance sheet.

The Bidding War Heats Up: CNBC reported Thursday morning that Netflix has positioned itself as the leading contender, with Warner Bros Discovery expected to announce a winner as early as next week.

Here's the backstory: Paramount has been circling Warner Bros Discovery since September, pursuing the entire company including HBO Max, the Warner Bros film studio, and cable networks TNT and TBS. Initial bids went out in mid-November, but Warner Bros Discovery rejected three separate offers from Paramount, including a final pitch of $23.50 per share. That rejection prompted Warner Bros Discovery to launch a formal sale process to attract additional suitors.

The potential deal could create bundled content packages combining HBO and Netflix programming, possibly at lower prices for consumers. But here's the catch: industry analysts are skeptical about subscriber growth. Reports indicate Netflix wouldn't gain many new subscribers from this acquisition because there's substantial overlap—most HBO subscribers already have Netflix accounts.

NFLX Price Action: Netflix shares declined 0.56% to $103.37 at the time of publication Thursday. The stock is currently trading 23.1% below its 52-week high.