Netflix has reached an agreement to purchase Warner Bros. Discovery’s TV and film studios and streaming operations for $72 billion.
This transaction would give the streaming pioneer that has revolutionized the media sector control over one of Hollywood’s most valuable and established properties.
The deal, which was made public on Friday, comes after a weeks-long bidding war in which Netflix took the lead with an offer of almost $28 per share, surpassing Paramount Skydance’s proposal of about $24 for the entirety of Warner Bros. Discovery, including the cable TV assets planned for a spinoff.
Warner Bros. Discovery’s stock ended at $24.5 on Thursday, making it worth $61 billion.
A DEAL TO CHANGE THE MEDIA LANDSCAPE
Buying the owner of well-known franchises like “Game of Thrones,” “DC Comics,” and “Harry Potter” will further tip the scales in favor of the streaming behemoth, which established its dominance without significant acquisitions or a sizable content library.
This will help it fend off competition from Walt Disney and Paramount, which is backed by the Ellison family.
“Together, we can give audiences more of what they love and help define the next century of storytelling,” Ted Sarandos, co-CEO of Netflix, said in a statement.
STRONG ANTITRUST SCRUTINY PROBABLE
As it enters the gaming industry and searches for new growth opportunities following the success of its password-sharing crackdown, analysts claim that Netflix is motivated by a desire to secure long-term rights to popular series and movies and rely less on foreign studios.
However, since the merger would give the largest streaming service in the world ownership of a rival that is home to HBO Max and has almost 130 million streaming customers, it is expected to undergo intense antitrust investigation in both Europe and the United States.
In a letter earlier this week, David Ellison-led Paramount, which has tight ties to the Trump administration and initiated the bidding battle with a series of unsolicited offers, questioned the selling process, claiming Netflix was given preferential treatment.
Netflix said in deal negotiations that a possible merger of its streaming service with HBO Max would benefit customers by cutting the cost of a packaged offering, thereby alleviating worries about market concentration.
According to media sources, the firm has also assured Warner Bros. Discovery that it will continue to show the studio’s movies in theatres in an effort to allay concerns that the agreement would eliminate another studio and a significant supply of theatrical pictures.
CASH AND STOCK AGREEMENT
Premarket trading saw a roughly 3% decline in Netflix shares and a 2.2% decline in Paramount shares. The third suitor, Comcast, was trading with little change.
Each Warner Bros. Discovery shareholder will receive $23.25 in cash and around $4.50 in Netflix shares per share under the terms of the agreement, valuing Warner at $27.75 per share, or roughly $72 billion in equity and $82.7 billion, including debt.
After Warner Bros. Discovery separates its worldwide networks division, Discovery Worldwide, into a distinct listed business, which is currently scheduled to be completed in the third quarter of 2026, the deal is expected to be finalised.
By the third year following the purchase closing, Netflix anticipates generating at least $2 billion to $3 billion in annual cost reductions.
