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Netflix has agreed to buy Warner Bros. Discovery’s TV and film studios and streaming division for $72 billion US, a deal that would hand control of one of Hollywood’s most prized and oldest assets to the streaming pioneer that has upended the media industry.
The agreement announced Friday follows a weeks-long bidding war where Netflix seized the lead with a nearly $28-a-share offer that eclipsed Paramount Skydance’s nearly $24 bid for the whole of Warner Bros. Discovery, including the cable TV assets slated for a spinoff.
Shares of Warner Bros. Discovery climbed 6.3 per cent during Friday’s trading, while Netflix shares closed 2.9 per cent lower and Paramount Skydance tumbled 9.8 per cent.
Buying the owner of marquee franchises including Game of Thrones, DC Comics and the Harry Potter franchise will further tilt the power balance in Hollywood in favour of the streaming giant that built its dominance without major acquisitions or a large content library. Warner Bros. has produced several best-picture winners at the Academy Awards historically, including Casablanca, My Fair Lady, Unforgiven and The Departed.
“For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture,” David Zaslav, CEO of Warner Bros. Discovery, said 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.”
But the deal will likely face strong antitrust scrutiny in Europe and the U.S. as it would give the world’s biggest streaming service ownership of a rival that is home to HBO Max and boasts nearly 130 million streaming subscribers.
Cinema United, a global exhibition trade association, said in a statement on Friday the deal poses an “unprecedented threat” to movie theatres worldwide.
“In light of the current regulatory environment, this will raise eyebrows and concerns. The combined dominant streaming player will be heavily scrutinized,” PP Foresight analyst Paolo Pescatore said.
Pledge to maintain cinema showings
Warner Bros. Discovery had reportedly also received offers from Paramount Skydance and Comcast. Paramount and Comcast did not immediately respond to requests for comment.
David Ellison-led Paramount, which kicked off the bidding war with a series of unsolicited offers and has close ties with the current U.S. administration — his father, Oracle co-founder Larry Ellison, is a longtime friend of Donald Trump — questioned the sale process earlier this week in a letter alleging favourable treatment to Netflix.
To ease concerns about market concentration, Netflix argued in deal talks that a potential combination of its streaming service with HBO Max would benefit consumers by lowering the cost of a bundled offering, Reuters reported on Tuesday.
The company has also told Warner Bros. Discovery that it would keep releasing the studio’s films in cinemas in a bid to ease fears that its deal would eliminate another studio and major source of theatrical films, according to media reports.
“We’re highly confident in the regulatory process. This deal is pro-consumer, pro-innovation, pro-worker, it’s pro-creator, it’s pro-growth,” Sarandos said on a call after the deal was announced.
Analysts have said Netflix is driven by a desire to lock up long-term rights to hit shows and films and rely less on outside studios as it expands into gaming and looks for new avenues of growth after the success of its password-sharing crackdown.
The company has leaned on its ad-supported tier to drive growth, but that is not expected to become a major revenue engine until next year.
Warner Bros. Discovery was created just three years ago when AT&T spun off WarnerMedia, which was merged with Discovery Communications in a $43 billion deal.
The $72-billion US deal is likely to face anti-trust scrutiny in Europe and the United States, as it gives Netflix ownership of one of its biggest competitors, HBO Max.
Trump has a history dating back to his first term of getting involved in big media mergers and weighing in on one side. He actively lobbied his Department of Justice to stop AT&T’s $85 billion purchase of Time-Warner, voicing concerns about media concentration.
Lawmakers on both sides of the aisle have expressed concerns this week.
“A Netflix-Warner Bros. would create one massive media giant with control of close to half of the streaming market threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk,” said Massachusetts Democratic Sen. Elizabeth Warren, who supports strong antitrust enforcement.
Republican Sen. Mike Lee of Utah said on Wednesday that “increasing Netflix’s dominance this way would mean the end of the Golden Age of streaming for content creators and consumers.”
Netflix could counter that by pointing to shifting media habits and the lead of Alphabet’s YouTube among streaming apps in terms of time spent watching on television.
The Justice Department’s antitrust unit is led by Gail Slater, a former executive at Fox Corp. and Roku and, later, an economic advisor to Vice-President JD Vance.
Group of Hollywood creators reportedly concerned
Under the deal, each Warner Bros. Discovery shareholder will receive $23.25 in cash and about $4.50 in Netflix stock per share, valuing Warner at $27.75 a share, or about $72 billion in equity and $82.7 billion, including debt.
The deal is expected to close after Warner Bros. Discovery spins off its global networks unit, Discovery Global, into a separate listed company, a move now set for completion in the third quarter of 2026.
Back in June, Warner Bros. Discovery outlined plans to split its cable and streaming offerings — with HBO, HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group and DC Studios, to become part of a new streaming and studios company. Meanwhile, networks like CNN, Discovery and TNT Sports and digital products such as the Discovery+ streaming service and Bleacher Report would make up a separate cable counterpart.
Some Hollywood stars have opposed a Warner acquisition:
It’s not clear how approval of Netflix’s bid would ultimately affect Canadian viewers, if at all. Warner Bros. Discovery licenses HBO content to Crave, with that subscription service offered by Bell Media heralding an exclusive, multi-year deal in 2024.
A consortium of leading film industry figures urged U.S. Congress to intervene and oppose a Netflix acquisition, Variety reported on Thursday.
In an email to members of Congress, the consortium, calling themselves “concerned feature film producers,” said they left their letter unsigned out of fear of retaliation, citing Netflix’s significant clout both as a buyer and distributor, according to Variety.
Reuters could not independently verify the report.
