Warner Bros. Discovery said on Friday that it has reached an agreement to sell its film, television, and streaming properties to Netflix in a transaction worth $82.7 billion, marking the beginning of one of the biggest and most significant mergers in contemporary Hollywood history.
The deal, which unites the world’s largest streaming destination with a legendary 102-year-old film company, promises to create a new entertainment and media juggernaut if it is allowed by federal regulators.
The “Harry Potter” film series, HBO, and the HBO Max streaming service are all part of Warner Bros.’ portfolio. With over 300 million paid users across more than 190 countries, Netflix is home to shows like “Stranger Things” and “Squid Game.”
In a press statement, Netflix co-CEO Ted Sarandos stated, “Our mission has always been to entertain the world.” “We’ll be able to do that even better by combining our culture-defining titles like “Stranger Things,” “KPop Demon Hunters,” and “Squid Game” with Warner Bros.’ excellent library of shows and movies, from timeless classics like “Casablanca” and “Citizen Kane” to contemporary favourites like “Harry Potter” and “Friends.”
Netflix’s Strategic Acquisition and Vision
Sarandos continued, “Together, we can give audiences more of what they love and help define the next century of storytelling.”
Hollywood entered a new era with Netflix’s acquisition of Warner Bros., as the industry shifted from primarily theatrical production to increasingly digital distribution. As it competes with tech behemoths like YouTube and TikTok, the acquisition strengthens Netflix’s market dominance and broadens the company’s content inventory.
Through the agreement, Netflix would gain access to well-known and profitable intellectual property, such as DC Comics characters like Batman and Superman, the TV series “Game of Thrones,” and a vast library of films spanning from Hollywood’s classical era to the era of CGI-powered fantasy epics.
Before the announcement, Netflix reportedly promised to release Warner Bros. films in physical theatres to calm the creative community. However, many filmmakers have serious doubts about Netflix’s financial strategy, which prioritises streaming distribution over theatrical premieres. Usually, Netflix only shows a few films in a few theatres for brief periods.
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Financial Structure and Valuation of the Deal
Warner Bros. Discovery was valued at $27.75 per share, with an enterprise value of $82.7 billion and an equity value of $72 billion that accounts for Warner Bros. debt, according to a news statement issued by the two businesses on Friday announcing the acquisition.
Warner Bros. Discovery’s total market capitalisation, or the company’s worth as determined by its stock price, was $60 billion as of Thursday’s trade.
Netflix made a startlingly large bid for Warner’s streaming and HBO businesses, paying $72 billion for just those two businesses—more than the $60 billion market value of the entire company. Netflix announced that it would obtain a $59 billion bridging loan from three major banks to help finalise the cash portion of the acquisition.
With billions of dollars in debt and slow streaming growth, Warner Bros. Discovery officially listed itself for sale in the fall. Comcast and Paramount Skydance were two of the company’s suitors, and they both submitted bids in a mainly confidential manner. (NBCUniversal, the parent company of NBC News, is owned by Comcast.)
Statements from Leadership and Company Direction
In a press statement, Warner Bros. Discovery president and CEO David Zaslav stated, “Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people what they love to watch the most.”
“Warner Bros. has delighted audiences, captured the world’s attention, and shaped our culture for more than a century,” Zaslav continued. “We will guarantee that people everywhere will continue to enjoy the world’s most poignant stories for generations to come by partnering with Netflix.”
According to a source familiar with the situation, Zaslav would leave the combined company if the sale goes through.
Warner-owned cable networks, such as CNN, TNT, and TBS, would not be included in the partnership.
Regulatory Challenges and Antitrust Concerns
Due to its substantial financial resources and political connections, Paramount was primarily seen as the front-runner in the bidding battle. David Ellison, the chairman and CEO of Paramount, is the son of President Donald Trump’s ally and Silicon Valley tycoon Larry Ellison.
Warner Bros. and Netflix’s corporate union continues to face political obstacles and possible antitrust scrutiny.
Three senators, Bernie Sanders of Vermont, Richard Blumenthal of Connecticut, and Elizabeth Warren of Massachusetts, both Democrats, warned the Justice Department’s Antitrust Division in late November that any prospective Warner Bros. merger might be tainted by “political favouritism and corruption.”
In a letter to Attorney General Pam Bondi that same month, Representative Darrell Issa, a Republican from California, warned that the merger of Netflix and HBO Max would result in a business with more than “30 per cent share of the streaming market: a threshold traditionally viewed as probably problematic under antitrust law.”
Increased Political Pressure and Industry Response
Variety claims that an anonymous group of “concerned feature film producers” wrote to Congress in early December, pleading with them to openly oppose Netflix’s proposal and give the possible agreement “the highest level of antitrust scrutiny.”
State regulators may also take notice of the acquisition.
“The Department of Justice feels that additional consolidation in markets that are central to American economic life — whether in the finance, airline, grocery, or media and entertainment markets – does not serve the American economy, consumers, or competition well,” the California attorney general’s office said in a statement.
The representative went on, “We are committed to protecting consumers and California’s economy from consolidation we find unlawful.”
Since its establishment in 1923, Warner Bros. has been owned by several companies; its recent history is particularly complicated. In 2016, AT&T purchased it for $85 billion. Warner Bros. assets were then spun off by AT&T and combined with Discovery in 2022.
