Netflix Announces $72 Billion Acquisition of Warner Bros. Discovery

Netflix has secured a landmark agreement to acquire Warner Bros. Discovery for approximately $72 billion. This monumental deal, revealed on Friday, would unite two of the largest entities in the entertainment industry, reshaping the landscape of television and film. If approved by regulatory authorities, the merger will combine Warner’s extensive library, including franchises like “Harry Potter,” with Netflix’s original content, which features hits such as “Stranger Things” and “Squid Game.”

David Zaslav, CEO of Warner Bros. Discovery, expressed optimism about the merger, stating, “For more than a century, Warner Bros. has thrilled audiences… By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.” The deal values Warner shares at $27.75 each, culminating in a total enterprise value of $82.7 billion when accounting for debt. The transaction is anticipated to finalize within the next 12 to 18 months, contingent on the completion of Warner’s planned separation of its cable operations.

This acquisition is expected to attract significant antitrust review, particularly regarding its potential impact on streaming services. Mike Proulx, a vice president at Forrester, remarked, “Netflix is the top streaming service today. Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry.”

As questions loom about the future of HBO Max alongside Netflix, Proulx highlighted the possibility of combining the two platforms into a single service, which could offer consumers a more streamlined subscription experience. This change might alleviate the financial burden as users face rising costs for multiple streaming subscriptions.

Netflix has assured its subscribers that the integration of HBO and HBO Max content will enhance the viewing experience. “The addition of HBO Max programming will give our members even more high-quality titles from which to choose,” stated Ted Sarandos, co-CEO of Netflix.

Despite the optimistic outlook from Netflix executives, critics are concerned about the implications for theatrical releases and the broader film industry. Cinema United, a trade association representing over 30,000 movie screens in the U.S. and an additional 26,000 internationally, voiced strong opposition to the deal. Michael O’Leary, CEO of Cinema United, warned that the merger “poses an unprecedented threat to the global exhibition business,” suggesting that it could lead to theatre closures and job losses.

Netflix has historically maintained a limited presence in traditional theatrical releases but has made exceptions for certain projects, such as “Frankenstein” and the upcoming “Stranger Things” series finale. The company has not reported specific ticket sales figures, but “KPop Demon Hunters” reportedly topped the box office in late August with earnings close to $20 million.

The acquisition marks a notable shift for Netflix, which had previously distanced itself from legacy media networks. Just last October, Sarandos reiterated the company’s position against owning traditional media outlets. Warner Bros., with a storied history spanning over 102 years, is one of Hollywood’s remaining “big five” studios. Should the deal proceed, the remaining legacy studios will include Disney, Paramount, Sony Pictures, and Universal.

The announcement follows a prolonged bidding process for Warner Bros. Discovery, with Netflix emerging as the frontrunner amid interest from other major players like NBC owner Comcast and Skydance-owned Paramount. The complexities surrounding the acquisition may intensify given the political landscape and potential regulatory challenges. Proulx noted that political factors could significantly influence the deal’s outcome, particularly given previous tensions involving major industry players.

Warner Bros. had previously announced plans to separate its streaming and studio operations from its cable business, intending to create a new publicly traded entity focused on streaming and studios. This separation is expected to be completed by the third quarter of 2026.

Following the announcement, shares of Warner Bros. rose nearly 2%, while Netflix’s shares fell by nearly 2% and Paramount’s shares dropped nearly 6%. The outcome of this acquisition remains uncertain but is poised to have far-reaching implications for the entertainment industry and the way audiences consume content in the future.