Netflix has agreed to acquire Warner Bros Discovery’s TV, film studios, and streaming division for $72 billion. The streaming pioneer that once disrupted Hollywood has now become the thing it disrupted a mainstream studio.
From Disruptor to Studio Owner
“I know some of you are surprised that we’re making this acquisition – and I certainly understand why,” Netflix Co-CEO Ted Sarandos said on a call with investors. “Over the years, we have been known as builders, not buyers, but this is a rare opportunity that’s going to help us achieve our mission to entertain the world, and bring people together through great stories.”
The agreement follows a weeks-long bidding war in which Netflix offered nearly $28 per share, eclipsing presumed front-runner Paramount Skydance, which made a series of unsolicited bids to acquire all of Warner Bros Discovery, including cable TV assets slated for spinoff.
A Century of Content
Netflix, which has spent a decade developing original series like “Stranger Things” and “Bridgerton,” along with films like “KPop Demon Hunters,” will gain access to Warner Bros’ vast content library built over the last century. This includes marquee franchises such as “Game of Thrones” and “Harry Potter,” and DC Comics’ entire roster of superheroes, including Batman and Superman.
The two companies together will “help define the next century of storytelling,” said Sarandos, who had once famously declared “the goal is to become HBO faster than HBO can become us.”
Market Reaction and Competition
Warner Bros Discovery shares rose 3.2% to $25.33 following the announcement, while Netflix fell about 0.2% and Paramount dropped 6.1%.
Paramount reportedly offered $30 per share for Warner Bros Discovery and is considering making a takeover offer directly to WBD’s shareholders, according to CNBC. Paramount and Comcast, the third suitor, did not immediately respond to requests for comment.
Regulatory Headwinds Expected
The deal is likely to face strong antitrust scrutiny in both Europe and the United States, 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.
“There will be resistance from parts of Hollywood and various unions,” said Tom Harrington, head of television at Enders Analysis in London. “HBO, the creative jewel, would be terribly exposed within Netflix, although it has survived difficult owners for a lot of its existence.”
David Ellison-led Paramount, which has close ties with the Trump administration, had questioned the sale process earlier this week and alleged favorable treatment to Netflix.
Cinema United, a global exhibition trade association, has called the deal an “unprecedented threat” to movie theaters worldwide, while former WarnerMedia CEO Jason Kilar said he could not think of “a more effective way to reduce competition in Hollywood than selling WBD to Netflix.”
Deal Structure and Timeline
Under the agreement, each Warner Bros Discovery shareholder will receive $23.25 in cash and approximately $4.50 in Netflix stock per share, valuing Warner at $27.75 per share, or about $72 billion in equity and $82.7 billion including debt. This represents a premium of 121.3% to Warner Bros Discovery’s closing price on September 10, before initial reports of a possible buyout emerged.
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.
Netflix has offered Warner Bros Discovery a $5.8 billion breakup fee, while Warner Bros Discovery would pay Netflix $2.8 billion if the deal collapses. Netflix expects to generate at least $2 billion to $3 billion in annual cost savings by the third year after the deal closes.
Strategic Benefits and Bundle Potential
Looking to address concerns, Netflix said the deal would give subscribers more shows and films, boost its U.S. production and long-term spending on original content, and create more jobs and opportunities for creative talent.
Netflix Co-CEO Greg Peters told investors the company could package the streaming services together in a bundle or find ways to introduce HBO Max to Netflix subscribers. The streaming service has a long history of building audiences for television series, as it did for “Breaking Bad” and the legal drama “Suits.”
The company has reportedly told Warner Bros Discovery it would keep releasing the studio’s films in cinemas to ease fears that the deal would eliminate another major source of theatrical films.
Growth Strategy Beyond Streaming
Analysts suggest 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.
Netflix shares are up just 16% this year, after surging more than 80% in 2024, as investors worry its breakneck growth could be slowing, especially after it stopped disclosing subscriber figures earlier this year.
Buying Warner Bros could deepen its gaming bet. WBD is one of the few entertainment companies to notch big successes in the sector, including its Harry Potter title “Hogwarts Legacy,” which has generated more than $1 billion in revenue.
“In light of the current regulatory environment, this will raise eyebrows and concerns. The combined dominant streaming player will be heavily scrutinized,” said PP Foresight analyst Paolo Pescatore. “We should expect this to wrangle on given Paramount Skydance pursuit for Warner Bros Discovery.”
