Netflix has reached an agreement to acquire the studio and streaming operations of Warner Bros. Discovery for $72 billion. This transaction would integrate two significant entities within the film and television sectors, potentially reshaping the entertainment industry.
Transaction Details
The acquisition encompasses Warner Bros.' namesake television and motion picture divisions, HBO Max, and DC Studios. The deal is valued at $27.75 per Warner share, resulting in a total enterprise value of approximately $82.7 billion. The completion of the transaction is projected within 12 to 18 months, pending Warner's previously announced separation of its cable operations. Networks such as CNN and Discovery are not included in this acquisition.
Industry Impact and Regulatory Scrutiny
This merger is expected to undergo significant antitrust review, primarily due to the consolidation of two major streaming platforms, Netflix and HBO Max, under single ownership. Analysts have indicated that this deal could establish Netflix as a dominant force in the streaming market, representing a notable shift in the entertainment landscape.
Regarding the future operations of Netflix and HBO Max, it remains to be determined whether they will maintain separate subscriptions. However, possibilities include the introduction of bundle promotions and a broader expansion of content libraries. Netflix has stated that the integration of HBO and HBO Max programming will offer its members a wider selection of titles and optimize consumer plans. Conversely, concerns have been raised that industry consolidation could lead to reduced content variety and fewer choices for consumers in the long term.
Theatrical Release Strategy
Acquiring Warner's established studios signifies a shift for Netflix, particularly concerning its presence in theatrical distribution. Under the proposed acquisition, Netflix has committed to continuing theatrical releases for Warner's studio films, honoring existing contractual agreements. Netflix has historically kept most of its original content on its online platform, with exceptions for awards contenders and limited theatrical screenings.
Background and Market Reaction
Netflix's co-CEO, Ted Sarandos, had previously stated in October that the company had no interest in acquiring "legacy media networks" but did not entirely dismiss a potential bid for Warner. The announcement follows a multi-month bidding process for Warner Bros. Discovery, which reportedly involved interest from other entities like NBC owner Comcast and Skydance-owned Paramount.
Warner had outlined plans in June to separate its streaming and studio operations (including HBO, HBO Max, Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios) into a new company, distinct from its cable business (CNN, Discovery, TNT Sports, Discovery+). The cable counterpart, "Discovery Global," is slated to become a new publicly-traded company by the third quarter of 2026.
Following the announcement on Friday, Warner Bros. shares increased by nearly 2% after U.S. markets opened, while Netflix shares declined by nearly 2%. Paramount's shares fell by nearly 6%.