Shares in Netflix on Wednesday stumbled after Morgan Stanley analyst Benjamin Swinburne questioned the value to the streaming giant from potentially bidding to acquire Warner Bros. Discovery and prized properties like DC Comics and the Harry Potter and Lord of the Rings franchises.

While such a transaction may have long-term benefits for Netflix, Swinburne wrote the streamer may have the smallest synergy opportunity and perhaps the toughest regulatory path to completing the deal. He added in a Nov. 19 investors note that Netflix shares have been under pressure over concerns that a WB acquisition, if announced, would complicate the investment thesis, distract management, and/or dilute EPS. Shares in Netflix fell by $4.51, or 4 percent, to $109.57 in afternoon trading after Swinburne weighed in on an ongoing bidding contest for WBD. That also came as Wall Street chatter points to Paramount, led by CEO David Ellison, as the frontrunner and preferred buyer, even as bids from Comcast and Netflix are said to be in the works and could face hurdles due to U.S. President Trumps personal views on those companies.

Preliminary bids for WBD are due this week, and Paramount, Comcast and Netflix have expressed interest in either pieces of the company or the whole company. Swinburne has recently been bullish on Netflix for its potential advertising revenue upside and engagement growth.

But were Netflix to prevail with its possible bid for WBD, Swinburne argued integrating Warner Bros. studio assets threw up short term risks, including from potentially diverting movies and TV series to its streaming platform as it replaced a theatrical release strategy and third-party sales currently with going direct-to-consumers.

Such a transition would take time, as TV distribution is built on run-of-series agreements and multi-year licensing deals and talent relationships would likely require some in-production films to still see theatrical distribution. Long-term, however, this kind of business model pivot would put downward pressure on the earnings power of the acquired businesses, which would need to be recouped through faster growth at core Netflix to justify the acquisition price, if a deal were to be announced, Swinburne argued.

If Netflix were to unveil a bid for Warner Bros., Swinburne sees added value from acquiring HBO. For example, Netflix could shut the service down and shift all content, both originals and licensed, onto Netflix. That would be walking away from nearly $2 billion of adjusted. EBITDA, but Netflix may feel the content can be better monetized on core Netflix.

And the biggest obstacle to Netflix from a WBD bid could come on the regulatory front. While we do not believe any FCC approvals would be required, the DOJ could look at this combination in the context of anti-trust law. Concerns from theater operators, labor unions and streaming competitors could also likely emerge, Swinburne wrote about implications from the Department of Justice and Federal Communications Commission in Washington D.C.