Netflix on Friday said she buys Warner Bros. in a deal valued at $82.7 billion, combining the largest streaming service with the legendary studio that produced films such as “Casablanca” and the “Harry Potter” franchise.
Netflix said in a statement that the deal is expected to close after Warner Bros. Discovery will spin off its television networks division Discovery Global, which is expected to be completed in the third quarter of 2026.
Netflix said it will buy Warner Bros. at $27.75 per share, giving the deal a value of $72 billion and a total enterprise value of $82.7 billion. The deal is expected to close in 12 to 18 months, Netflix said.
The agreement came after Warner Bros. Discovery, Warner's parent company, announced in June that it plans split into two partsby separating its cable networks, such as CNN and TNT Sports, from its streaming and studio businesses, including HBO Max and Warner Bros. Television.
But in October, Warner Bros. Discovery stated that aroused interest from companies about buying all or part at once, with the help of the Wall Street Journal reporting that media and entertainment companies including Paramount Skydance (parent company of CBS News) and Comcast Corp. were also pursuing a deal with Warner Bros.
Paramount Skydance was reportedly interested in acquiring the entire Warner Bros. company, including its cable assets such as CNN and Discovery.
Why Netflix Wants Warner Bros.
Purchase of Warner Bros. studios will mark a major strategic shift for Netflix, experts say. While Netflix already produces original programming, including popular shows like Stranger Things, the acquisition will expand the company's content creation capabilities and also give it control of Warner Bros. The catalog is 102 years old, analysts say.
Netflix “will cement itself as the Goliath of streaming,” said Mike Proulx, research vice president at Forrester. “This deal changes the calculus of the streaming wars, representing a seismic shift in the entertainment industry.”
The enlarged company's increased scale could also help Netflix in negotiations with advertisers and partners, research firm MKI Global said in a report. Adding Warner Bros. The studio and streaming businesses will give Netflix “a greater pipeline of premium films and series, reduce hit risk and give the combined group greater control over how each film earns over its cycle,” the research firm added.
The deal also comes as Netflix competes with streaming rival YouTube, which is growing at a faster pace, said Lightshed Partners analyst Rich Greenfield.
“Ultimately, investors will need to evaluate whether Netflix is entering into this deal as a 'rare opportunity' to accelerate its growth or whether it is truly a more defensive move designed to limit competitors' ability to intensify and intensify competition,” analysts at MoffettNathanson Research, an investment advisory firm specializing in technology, telecommunications and media, said in a research note.
The streaming app that will rule them all?
In a conference call with investors to discuss the acquisition, Netflix executives said the deal would help the company attract more subscribers while also creating value for shareholders.
“We expect to attract and retain more subscribers and generate additional revenue and operating profit,” co-CEO Greg Peters said on the call. “We think this will accelerate our business for decades to come.”
Peters was also questioned about his comments at the October conference when he said large media mergers “don't have an impressive track record.” The executive said Friday that he believes the merger will be different because of Netflix's expertise in content creation.
“Many of these failures [are] because the company that did the acquisition didn't understand the entertainment business,” he said. “We understand this business.”
Analysts believe Netflix will benefit from the addition of Warner Bros. Extensive streaming and film content.
“The rationale for such a deal stems from combining two overlapping streaming offerings into one flagship Netflix app or a dense Netflix-HBO Max package with one login, one discovery layer and one advertising engine,” MKI said.
Potential Regulatory Obstacles
Under the proposed deal, Netflix would commit to honoring any contractual release agreements from Warner Bros. studio films. However, Wall Street analysts say the streaming giant could face regulatory hurdles as it tries to complete the deal amid concerns the deal could dampen competition among movie theaters.
“Significant concerns have been raised about the potential impact on the theatrical market if Netflix takes over. [Warner Bros.]”Wedbush Securities analysts said in a note to investors, adding that “concerns remain in the industry and among government officials” about the impact of such a deal.
Some lawmakers on Friday also expressed concern that Netflix's dominance in streaming could lead to higher prices for consumers.
“Netflix's permission to buy Warner Bros. and controlling access to nearly half of streaming subscribers means it could become more expensive to watch your favorite movies and shows,” said Sen. Elizabeth Warren, a Massachusetts Democrat. social media.
Shares of Warner Bros., whose share price has more than doubled since this summer as speculation about a possible deal heats up, rose $1.54, or 6.3%, to close at $26.08. Netflix shares fell $2.98, or 2.9%, to $100.24.
