Netflix has agreed to acquire the film and streaming businesses of Warner Bros Discovery for $72bn, a deal that would combine one of the largest streaming platforms with a major Hollywood studio group and place some of the industry’s biggest franchises under a single company, pending regulatory approval.
Deal Scope and Assets Included
Netflix emerged as the winning bidder ahead of Comcast and Paramount Skydance after an extended bidding process. The assets being acquired include Warner Bros’ film and television studio operations and its streaming business, which owns HBO Max. Warner Bros also controls major franchises such as Harry Potter and Game of Thrones. The takeover remains subject to approval by competition authorities.
Netflix Leadership on Strategy and Brand Direction
Netflix co-chief executive Ted Sarandos said the company was “highly confident” it would secure regulatory clearance and was moving “full speed” toward completing the transaction. He said combining Warner Bros’ library of films and shows with Netflix originals such as Stranger Things would allow the company to offer more content to audiences and shape future storytelling. Sarandos described the acquisition as a “big day” for both companies and a “rare opportunity” to position Netflix for long-term growth.
Netflix co-chief executive Greg Peters said the company believed the HBO brand was important for consumers but said it was too early to outline how the offering would be structured. Netflix estimates it will generate between $2bn and $3bn in savings, largely by removing overlapping support and technology functions across the two businesses.
Cinema Releases and Production Plans
Under the proposed structure, Warner Bros films will continue to debut in cinemas. The Warner Bros television studio will also retain the ability to produce shows for third-party platforms, while Netflix will continue to produce content exclusively for its own streaming service.
Warner Bros president and chief executive David Zaslav said the transaction would bring together “two of the greatest storytelling companies in the world” and said the combination would ensure the continued global reach of its stories.
Transaction Value and Corporate Structure Changes
The cash-and-stock transaction values Warner Bros shares at $27.75 each. The total enterprise value, which includes debt and equity, is approximately $82.7bn, while the equity value alone is $72bn. The boards of directors of both companies approved the deal unanimously.
Netflix will complete the acquisition after Warner Bros finalises its previously announced plan to split its business into two separate companies next year. Its global networks division will become Discovery Global and will hold cable networks including CNN and TNT Sports in the United States, along with Discovery and free-to-air channels in Europe. TNT Sports International, however, will remain with the streaming and studios division that will be sold to Netflix.
Industry and Union Opposition
The agreement has drawn opposition from parts of the entertainment industry. The Writers Guild of America’s East and West branches issued a joint statement calling for the merger to be blocked, saying it would eliminate jobs, depress wages, worsen working conditions, raise consumer prices, and reduce the volume and diversity of content available to viewers.
Michael O’Leary, chief executive of Cinema United, said the merger posed “an unprecedented threat” to the global cinema business, adding that the impact would extend from large theatre chains to single-screen independents in small towns in the United States and abroad.
Analyst and Market Reaction
Industry analysts have also flagged potential risks. Paolo Pescatore, founder and analyst at PP Foresight, described the sale as a major signal of intent that underlined Netflix’s global ambitions in streaming, while also warning that the scale of the transaction could make integration challenging for Netflix. He said the move made strategic sense for Warner Bros.
Before agreeing to the partial sale, Warner Bros had rejected an earlier bid from Paramount in October to acquire the entire company, including its cable networks, before subsequently putting parts of its business up for sale.
Tom Harrington, head of television at Enders Analysis, said prior to the announcement that regulatory approval was uncertain and that, if approved, the transaction would have a major impact on the cinema industry. He said a newly merged company was likely to reduce television and film output, which could drive opposition from unions. Harrington also said consumers were likely to face higher prices, as Netflix would gain greater market penetration even if HBO Max were eventually phased out.
Danni Hewson, head of financial analysis at AJ Bell, said Netflix had signalled an effort to reassure Hollywood by committing to continue releasing Warner Bros films in cinemas. She said substantial cost savings could be achieved if the deal clears regulatory review quickly, but whether those savings would benefit subscribers or increase Netflix’s pricing power would draw close scrutiny in the months ahead.
Featured image credits: Wikimedia Commons
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