Netflix to Acquire Warner Bros. in Landmark $72 Billion Megadeal

Netflix Inc. has struck an agreement to acquire Warner Bros. Discovery Inc., a blockbuster deal that reshapes the entertainment landscape as the Silicon Valley streaming titan moves to absorb one of Hollywood’s oldest and most iconic studios.

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Under the terms announced Friday, Warner Bros. shareholders will receive $27.75 per share in a mix of cash and Netflix stock. The agreement values the company at $82.7 billion including debt, with an equity value of about $72 billion. Before closing the sale of its studio and HBO assets to Netflix, Warner Bros. will spin off its cable networks including CNN and TNT into a separate entity.

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Mega-mergers in the media world have a history of complications, and this deal is likely to face heavy regulatory scrutiny in both the US and Europe. Paramount Skydance Corp., which previously accused Warner Bros. of running an unfair bidding process, could still attempt to derail the acquisition by taking an offer directly to shareholders. The company has not publicly commented.

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If completed, the merger will unite two major streaming players with a combined subscriber base of roughly 450 million. Warner Bros.’ expansive catalog gives Netflix additional content firepower as it works to defend its lead over rivals such as Walt Disney Co. and Paramount.

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The acquisition marks an enormous strategic shift for Netflix, which in its 28-year history has never taken on a purchase of this scale. With the deal, Netflix would become the owner of the HBO brand and its celebrated library, including titles like The Sopranos and The White Lotus. The package also includes Warner Bros.’ sprawling Burbank studios and a deep archive of films and shows, from Harry Potter to Friends.

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“I know some of you didn’t expect us to make an acquisition like this,” Netflix co-CEO Ted Sarandos told analysts on Friday. He noted Netflix has long been seen as a company that prefers to build rather than buy. “But this is a rare opportunity that helps us advance our mission to entertain the world.”

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Netflix shares fell 3.5% Friday afternoon and are down about 17% since the company emerged as a potential buyer in October. Some investors have interpreted the acquisition as a sign Netflix may be concerned about slowing core growth a view co-CEO Greg Peters rejected. Warner Bros. stock, meanwhile, climbed 5.2% and has nearly doubled since initial reports of talks with Paramount surfaced in September.

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Friday’s announcement caps off months of rapid dealmaking that began with a series of takeover bids from Paramount, which prompted interest from both Comcast Corp. and Netflix. All three companies submitted sweetened offers this week, with Paramount proposing $30 per share for all of Warner Bros. Discovery and arguing that its structure offered a smoother path to regulatory clearance. Netflix ultimately prevailed, though many approval hurdles remain. The company expects to close the deal within about 18 months.

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California Republican Darrell Issa sent a letter to US regulators urging them to block a potential Netflix–Warner Bros. tie-up, warning it could harm consumers. Netflix has countered by arguing its biggest competitor is actually YouTube, owned by Alphabet Inc., and that bundling could ultimately reduce costs for users. Nielsen estimates Netflix consistently accounts for 8% to 9% of monthly US TV viewing and roughly 20% to 25% of streaming watch time.

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Analysts at Oppenheimer believe the growing dominance of short-form video platforms such as TikTok, YouTube, and Instagram Reels could help ease antitrust concerns by presenting clear competition for viewer attention.

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The announcement brings to mind a famous moment from 15 years ago when then–Time Warner CEO Jeff Bewkes compared Netflix to the Albanian Army suggesting it posed little threat. But Netflix’s aggressive push into original programming rapidly changed the landscape. Sarandos famously said Netflix aimed to “become HBO before HBO figured out streaming.” That prediction largely came true as Netflix reshaped the industry, while HBO struggled to transition from cable to a digital-first era.

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Bewkes ultimately sold Time Warner to AT&T in 2016, kicking off years of instability for both Warner Bros. and HBO. With the Netflix acquisition, the storied brands are heading toward their fourth owner in a decade.

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Warner Bros. officially put itself up for sale in October after rejecting three offers from Paramount, clearing the way for Netflix and Comcast to enter the bidding. While Peters publicly questioned the logic of massive media mergers at Screentime conference in October, Sarandos pushed internally for the acquisition. The process turned increasingly tense, with Paramount accusing Warner Bros. of favoring Netflix. Ultimately, Netflix’s offer when combining studio and streaming business valuations with estimated network value came out ahead.

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As outlined in the final agreement, Warner Bros. shareholders will receive $23.25 in cash and $4.50 in Netflix stock per share. Moelis & Co. advised Netflix on the transaction, while Wells Fargo, BNP Paribas, and HSBC provided $59 billion in debt financing one of the biggest loans ever arranged. Allen & Co., JPMorgan Chase & Co., and Evercore advised Warner Bros. Netflix agreed to pay a $5.8 billion breakup fee if the deal collapses or fails to secure approval. “We’re highly confident in the regulatory process,” Sarandos said.

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Regulators will scrutinize not only streaming overlap but also Netflix’s approach to theatrical releases a model the company has historically kept at arm’s length. In a notable shift, Netflix said it plans to continue releasing Warner Bros. films in theaters and producing TV shows for outside partners.

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Netflix says the combined entity will significantly expand domestic production capacity and support more investment in original content, which it argues will create jobs and strengthen the broader entertainment ecosystem. The company expects the deal to generate at least $2 billion to $3 billion in annual cost savings by year three.

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Warner Bros. Discovery CEO David Zaslav, who orchestrated the merger of Warner Bros. and Discovery in 2022 to compete with Netflix, will continue to lead the company through the transition. His role at Netflix, if any, has not been determined. The traditional TV business continues to shrink rapidly Warner Bros.’ cable division reported a 23% revenue drop last quarter as viewers cut the cord and advertisers redirect spending toward digital platforms.

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