Netflix agreed to buy Warner Bros. TV and film studios and streaming division Discovery for US$72 billion. This deal will transfer control of one of Hollywood's most valuable and oldest assets. streaming pioneer it revolutionized the media industry.
The agreement, announced Friday, follows a week-long bidding war in which Netflix seized the lead with an offer of nearly US$28 per share, eclipsing Paramount Skydance's offer of nearly US$24 for all of Warner Bros Discovery, including the cable TV assets slated for the spin-off.
Warner Bros Discovery shares closed at $24.50 on Thursday, giving the company a market value of $61 billion.
DEAL TO CHANGE THE MEDIA LANDSCAPE
Buying the owner of franchises such as Game of Thrones, DC Comics and Harry Potter would further shift the balance of power in Hollywood in favor of the streaming giant, which has achieved dominance without major acquisitions or a large library of content, helping its efforts to fend off competition from Walt Disney and the Ellison family-backed Paramount.
“Together, we can give viewers more of what they love and help define the next age of storytelling,” Netflix co-CEO Ted Sarandos said in a statement.
LIKELY STRONG ANTI-TRUST SCHEDULE
Analysts say Netflix is driven by a desire to lock up long-term rights to shows and movies and rely less on third-party studios as it expands into gaming and seeks new growth paths after success in cracking down on password sharing.
But the deal is likely to face tough antitrust scrutiny in Europe and the United States because it would give the world's largest streaming service ownership of a rival that is home to HBO Max and has nearly 130 million streaming subscribers.
Receive daily national news
Get the day's top news, political, economic and current affairs headlines delivered to your inbox once a day.
David Ellison-led Paramount, which launched a bidding war with a series of unsolicited offers and has close ties to the Trump administration, questioned the sale process earlier this week in a letter claiming favorably 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 the bundled offering, Reuters reported on Tuesday.
The company also reportedly told Warner Bros Discovery it will continue to release the studio's films in theaters to allay concerns that its deal would eliminate another studio and a major source of theatrical films.
Netflix shares fell nearly 3% in premarket trading, while Paramount shares fell 2.2%. Comcast, the third contender, was little changed.
Under the terms of the deal, each Warner Bros Discovery shareholder will receive US$23.25 in cash and approximately US$4.50 in Netflix shares per share, valuing Warner at US$27.75 per share, or approximately US$72 billion in equity and US$82.7 billion including debt.
The deal is expected to close after Warner Bros Discovery spins off its global network division Discovery Global into a separate listed company. The move is now scheduled to be completed in the third quarter of 2026.
Netflix said it expects to realize at least $2 billion to $3 billion in annual cost savings by the third year after the deal closes.
