Netflix to buy Warner Bros Discovery’s studios, streaming unit for $US72 billion
Reuters
Netflix agrees to buy Warner Bros Discovery’s TV, movie studios and streaming division for $72 billion; This deal will transfer control of one of Hollywood’s most valuable and oldest assets to the publishing pioneer.
The deal followed a weeks-long bidding war in which Netflix offered around $28 per share, eclipsing Paramount Skydance’s offer of close to $24 for all of Warner Bros. Discovery, including cable TV assets planned for a spinoff.
Buying out the owners of important franchises game of Thrones, DC Comics And Harry Potter It will further shift the balance of power in Hollywood in favor of Netflix.
That will help the streaming giant, which has so far dominated without major deals or a large library of content, fend off competition from Paramount, which is backed by Walt Disney and the Ellison family.
Netflix co-CEO Ted Sarandos said the two companies together “will help define the next century of storytelling” and once said “the goal is to become HBO faster than HBO can become us.”
Strong antitrust review likely
But the deal is likely to face strong antitrust scrutiny in Europe and the US as it would give ownership of the world’s largest streaming service, home to HBO Max, to a rival with around 130 million streaming subscribers.
Paramount, led by David Ellison, who started the bidding war with a series of unsolicited offers and has close ties to the Trump administration, questioned the sales process earlier this week and claimed that Netflix was given favorable treatment.
Even before bids were awarded, some members of Congress said the Netflix-Warner Bros. Discovery deal could harm consumers and Hollywood.
Seeking to allay some concerns, Netflix said the deal would provide subscribers with more shows and movies, increase U.S. production and long-term spending on original content, and create more jobs and opportunities for creative talent.
The company argued in deal negotiations that the combination of its streaming service with HBO Max would benefit consumers by lowering the cost of the bundled offering.
According to media reports, the company told Warner Bros. Discovery that it would continue to release the studio’s films in theaters in an attempt to allay fears that the deal would eliminate another studio and major source of theatrical releases.
Cash and stock deal
Under the deal, Warner Bros Discovery shareholders will each receive $23.25 per share in cash and approximately $4.50 in Netflix stock; This would value Warner at $27.75 per share, or about $72 billion in equity and $82.7 billion including debt.
The deal represents a 121.3 percent premium to Warner Bros Discovery’s closing price on September 10, before the first reports of a possible acquisition emerged.
The deal is expected to be completed after Warner Bros Discovery spins off its global network unit Discovery Global into a separate publicly traded company; This move is planned to be completed in the third quarter of 2026.
Netflix has offered Warner Bros Discovery a breakup fee of US$5.8 billion, while Warner Bros Discovery will pay Netflix US$2.8 billion if the deal collapses.
Netflix said it expects to achieve annual cost savings of at least $2 billion to $3 billion by the third year after the deal closes.
Netflix’s growth concerns
Analysts have said Netflix is driven by a desire to lock in long-term rights to popular shows and movies and is relying less on outside studios as it expands into gaming and is looking for new growth paths after the success of its crackdown on password sharing.
Its shares are up just 16 percent this year after rising more than 80 percent in 2024 as investors worry that its runaway growth could slow, especially after it stopped disclosing subscriber figures earlier this year.
The company has turned to its ad-supported tier to fuel growth, but it’s not expected to become a major revenue engine until next year. Analysts say the push into video games has stumbled due to strategy changes and executive turnover.
Acquiring Warner Bros. would also deepen its gaming betting; because WBD is one of the few entertainment companies that have achieved great success in the industry. Harry Potter title Hogwarts LegacyIt generated more than $1 billion in revenue.
Reuters
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