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Netflix To Acquire Warner Bros. Discovery For $82.7 Billion
So close, but so far // Illustration by Kate Walker
Warner Bros. Discovery has accepted Netflix’s $82.7 billion takeover bid (in mostly cash!) for its studios and streaming businesses — setting the stage for the biggest Hollywood merger in history.
The Big Picture: Netflix’s acquisition of Warner Bros. Discovery signals a major changing of the guard, with the streaming giant potentially swallowing the legacy Hollywood studio and taking control of the No. 3 streamer in the world. As you can imagine, antitrust alarm bells are blaring, so expect there to be significant regulatory hoops to jump through… if the deal is even approved.
Behind The Scenes: Despite saying over and over again that it was uninterested in major M&A, Netflix has changed its tune in a big way.
Here’s what to expect:
Netflix would now own Warner Bros. Pictures, Warner Bros. Animation, Warner Bros. Television, New Line Cinema, DC Studios, HBO Max, and HBO’s networks.
The remaining WBD assets — news networks, cable assets, etc. — will then be spun out into a new company, per WBD CEO David Zaslav’s original plan.
Now armed with a top-tier global-distribution pipeline, Netflix co-CEO Ted Sarandos said the company “expects” to keep releasing Warner Bros. films theatrically.
Netflix also said it wouldn’t simply swallow HBO Max, but would instead offer it as an additional option for subscribers — maybe like a tile, à la Hulu on Disney+.
Warner Bros. Television would continue making shows for third parties, like Ted Lasso for Apple TV.
Final Deal: As expected, many prominent parties are opposed to the acquisition, including theater owners, guilds, A-list producers, members of Congress, and both domestic and international regulators — all highlighting decreased competition, unprecedented market power, and an existential threat to the theatrical-exhibition business. Additionally, rival suitor Paramount — run by the very eager David Ellison — decried the bidding process and is planning to take his offer straight to the WBD board in an attempt at a hostile takeover.
In other words, things are going to get complicated, with Netflix and WBD expecting a 12-to-18 month regulatory review before the deal gets the green light (but Sarandos has already met with President Trump about it). At least there’s a consolation prize for WBD if things don’t pan out: Netflix has to pay a breakup fee of $5.8 billion if the deal falls apart.
Coming Soon: If a deal does go through, it’s possible that Netflix could use Warner Bros. theatrical distribution as its super-premium outlet to win over top filmmakers who were uninterested in working in streaming.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.