Netflix to acquire Warner Bros. studio and streaming business for $72 billion

Netflix Strikes $72 Billion Deal to Acquire Warner Bros. Discovery

Netflix has reached an agreement to acquire Warner Bros. Discovery in a landmark $72 billion deal that would unite two entertainment powerhouses and potentially reshape the streaming landscape. The cash and stock transaction, announced Friday, would combine Netflix’s global streaming dominance with Warner’s century-old film and television studio operations.

Under the deal, valued at $27.75 per Warner share with a total enterprise value of $82.7 billion including debt, Netflix would gain control of HBO Max and Warner’s vast content library, which includes franchises like Harry Potter and DC Studios properties. The acquisition excludes Warner’s cable operations such as CNN and Discovery, which will be spun off into a separate public company called “Discovery Global.”

“For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture,” said David Zaslav, CEO of Warner Bros. Discovery, in a statement. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”

The merger, expected to close within 12 to 18 months pending regulatory approval, would represent a significant shift in strategy for Netflix, which has historically avoided acquiring legacy media companies. As recently as October, Netflix co-CEO Ted Sarandos stated the company had “no interest in owning legacy media networks.”

Market analysts note the acquisition would solidify Netflix’s position as the dominant force in streaming entertainment. “Netflix is the top streaming service today. Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry,” said Mike Proulx, vice president and research director at Forrester.

One key question remains whether Netflix would maintain HBO Max as a separate service or integrate it into its existing platform. Either approach could provide consumers with potential pricing relief through bundled subscriptions at a time when streaming costs continue to rise.

The deal would also mark a significant expansion of Netflix’s theatrical presence. Under the proposed acquisition, Netflix has committed to honoring Warner’s existing agreements for theatrical film releases. This represents a departure from Netflix’s typical strategy of limited theatrical runs primarily for awards-qualifying purposes, though the company has recently shown increased interest in theatrical distribution with releases like “KPop Demon Hunters.”

The potential merger has already drawn criticism from cinema industry representatives. Cinema United, a trade association representing over 56,000 movie screens globally, expressed strong opposition to the deal, warning it “poses an unprecedented threat to the global exhibition business.”

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” said Michael O’Leary, CEO of Cinema United. “Theaters will close, communities will suffer, jobs will be lost.”

The acquisition faces significant regulatory hurdles, particularly regarding antitrust concerns about the combined company’s market power in the streaming sector. Industry experts anticipate intense scrutiny from regulators regarding the deal’s potential impact on consumer choice, subscription pricing, and competition within the entertainment industry.

The announcement concludes months of speculation about Warner Bros. Discovery’s future, during which several potential buyers emerged, including Comcast and Paramount. The latter seemed poised to acquire Warner’s entire business, including its cable operations, before Netflix secured the agreement for the streaming and studios portion.

Warner Bros., at 102 years old, represents one of the “big five” legacy Hollywood studios. Should the deal receive regulatory approval, the remaining major studios would be Disney, Paramount, Sony Pictures, and Universal.

The proposed transaction reflects the ongoing consolidation in the media industry as companies seek scale and content libraries to compete in the streaming era. For Netflix, acquiring Warner’s prestigious franchises and production capabilities could strengthen its position against competitors like Disney+ and Amazon Prime Video, while potentially opening new revenue streams through theatrical distribution.

Wall Street’s initial reaction showed Warner Bros. shares rising nearly 2% after the announcement, while Netflix stock fell approximately 2%. Paramount, which had been vying for Warner, saw its shares drop nearly 6%.