Netflix Agrees to Acquire Warner Bros. Discovery Studios and Streaming Division for $72 Billion

According to Reuters, Netflix has agreed to purchase the television and film studios and the streaming division of Warner Bros. Discovery for $72 billion.
Netflix's offer of $27.75 per share surpasses that of Paramount.
The deal is expected to face intense competitive scrutiny in Europe and the U.S. due to the joint dominance in the streaming sector.
The acquisition will enhance American production, increase spending on original content, and create more job opportunities.
Warner Bros. Discovery shares rose 3.2% to $25.33, while Netflix shares fell by about 0.2%, and Paramount shares dropped by 6.1%.
The deal follows a bidding war, with Netflix outbidding Paramount's Skydance.
Netflix will acquire Warner Bros. content, including "Game of Thrones," "Harry Potter," and DC Comics franchises.
The deal is expected to close after Warner Bros. Discovery separates its global networks unit in the third quarter of 2026.
Netflix anticipates annual cost savings of around $2-3 billion by the third year post-closing.

Deal details:
Parties involved: Netflix (buyer) and Warner Bros. Discovery (seller).
Value: $72 billion in stock, $82.7 billion including debt; each WBD shareholder receives $23.25 in cash and $4.50 in Netflix shares per share, valued at $27.75.
Assets acquired: television and film studios, and streaming division, including a vast content library with franchises such as "Game of Thrones," "Harry Potter," and Batman and Superman from DC Comics.
Strategic implications: grants Netflix control over a major Hollywood asset, making it a key studio; combines leading players in streaming; enhances Netflix's access to content, American production, original spending, and job opportunities; allows bundling of streaming services like HBO Max; deepens Netflix's bet on gaming with WBD successes like "Hogwarts Legacy"; aims to define the next century of storytelling and reduce reliance on external studios.

Quotes from executives:
Netflix co-CEO Ted Sarandos: "I know some of you are surprised by this deal - and I certainly understand why. Over the years, we have been known as builders, not buyers... but this is a rare opportunity that will help us fulfill our mission to entertain the world and bring people together through great stories."
Ted Sarandos: "The two companies together 'will help define the next century of storytelling,' Sarandos said, who once stated 'the goal is to become HBO faster than HBO can become us.'"
Netflix co-CEO Greg Peters: "The company can bundle streaming services together - or find ways to integrate HBO Max into Netflix subscribers. The streaming service has a long history of building audiences for TV series, as seen with 'Breaking Bad' or the legal drama 'Suits.'"
Netflix statement: "The deal will give subscribers more shows and films, enhance its American production and long-term spending on original content, and create more job opportunities and chances for creative talent."

Financial impact (stock reactions):
Warner Bros. Discovery shares rose 3.2% to $25.33, trading below the offer price.
Netflix shares fell by about 0.2%.
Paramount shares declined by 6.1%.
The deal represents a 121.3% premium on Warner Bros. Discovery's closing price on September 10.
Netflix shares have risen only 16% this year, following an increase of over 80% in 2024.

Regulatory considerations:
The deal is expected to face intense competitive scrutiny in Europe and the U.S., creating the largest streaming service in the world with ownership of a competitor with over 130 million subscribers.
Resistance is anticipated from parts of Hollywood and various unions; HBO may be affected within Netflix.
Cinema United sees an "unprecedented threat" to cinemas globally.
Jason Kilar, former CEO of Warner Media: "I can't think of 'a more effective way to reduce competition in Hollywood than selling WBD to Netflix.'"
Netflix commits to releasing WBD films in theaters to alleviate concerns.
PP Foresight analyst, Paolo Piscator: "Given the current regulatory environment, this will raise concerns and fears. The dominant player in streaming will be scrutinized heavily."

Analyst reactions:
Tom Harrington, Head of Television at Enders Analysis: "There will be resistance from parts of Hollywood and various unions. 'HBO, the creative jewel, will be woefully exposed within Netflix, even though it has survived tough owners for a long time.'"
PP Foresight analyst, Paolo Piscator: "We should expect this debate to continue as Paramount Skydance pursues Warner Bros. Discovery."

Additional relevant details:
Details of the bidding war: Netflix offered around $28 per share, surpassing unwanted offers from Paramount Skydance for Warner Bros. Discovery, including cable television assets.
Paramount offered $30 per share (unconfirmed report from CNBC).
David Ellison's Paramount questioned the sale process and accused preferential treatment for Netflix.
Some members of Congress stated the deal could harm consumers and Hollywood.
Termination fees: Netflix offers $5.8 billion to Warner Bros. Discovery; Warner Bros. Discovery pays $2.8 billion to Netflix if the deal collapses.
Comcast shares traded almost unchanged.
Netflix's motivations include locking in long-term rights to successful content, expanding into gaming (supported by WBD's success with "Hogwarts Legacy," which grossed over a billion dollars), and exploring new growth areas after its crackdown on password sharing; the ad-supported tier is not expected to be a major revenue driver until next year; Netflix's gaming push has stumbled.