Netflix has struck a deal with Warner Bros Discovery, the legacy Hollywood giant behind Harry Potter and Friends, to buy its studio and streaming business for $72 billion.
The acquisition will bring two of the industry’s biggest players in film and TV under one roof and alter the entertainment industry landscape.
Beyond its namesake television and motion picture division, Warner owns HBO Max and DC Studios. Netflix is ubiquitous with on-demand content and has built its own production arm to release popular titles, including Stranger Things and Squid Game.
“For more than a century, Warner Bros7 has thrilled audiences, captured the world’s attention, and shaped our culture,” said Warner Bros Discovery chief executive David Zaslav.
“By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
Under the deal, Warner Bros shareholders will receive $27.75 a share in cash and stock in Netflix. The total equity value of the deal is $72 billion, while the enterprise value of the deal is about $82.7 billion.
The transaction is expected to close in the next 12 to 18 months – after Warner completes its previously-announced separation of its cable operations. Not included in the deal are networks like CNN and Discovery.
The acquisition marks a major strategic shift for Netflix, which has never made a deal of this scope. The streaming pioneer grew to become Hollywood’s most valuable company, without the benefit of a library or studio, by licensing programmes from others and then expanding into original content.
With the purchase, Netflix becomes owner of the HBO network, along with its library of hit shows like The Sopranos and The White Lotus. Warner Bros assets also include its sprawling studios in Burbank, California, along with a vast film and TV archive.
The bid will draw tremendous antitrust scrutiny. Beyond TV and movie production, the merger will bring two of the streaming world’s biggest names – Netflix and HBO Max – under the same ownership.
Netflix said the addition of HBO and HBO Max programming will give its members “even more high-quality titles from which to choose” and “optimise its plans for consumers”.
Still, some warn that consolidation across the industry will mean less variety of content – and fewer choices for consumers down the road.
“For consumers, this would likely result in rising costs: Netflix would get more expensive and even though HBO Max would be shuttered/become non-essential, the greater penetration of Netflix households would likely mean an increase in total overall subscription revenue,” said Tom Harrington, head of television at Enders Analysis, Greater London.
Other critics are concerned about the effect the deal could have on the wider industry.
“If I was tasked with doing so, I could not think of a more effective way to reduce competition in Hollywood than selling WBD to Netflix,” Jason Kilar, former WarnerMedia chief executive, said on X.
Friday’s announcement arrives after a months-long bidding war for Warner Bros Discovery.
Warner announced its intention to split its streaming and studio operations from its cable business in June – outlining plans for HBO, HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, to become part of a new streaming and studios company.
