The streaming giant's acquisition of the century-old studio marks a seismic shift in Hollywood's power structure.
In a transaction that will fundamentally reshape the entertainment industry, Netflix and Warner Bros. Discovery announced that the companies have reached an agreement under which Netflix will acquire Warner Bros. This includes their film and television studios, HBO Max, and HBO.
The deal has a total enterprise value of approximately $82.7 billion, with an equity value of $72 billion. The announcement caps a heated bidding war that pitted the streaming powerhouse against David Ellison's Paramount Skydance and Comcast.
Under the agreement, Warner Bros. Discovery shareholders will receive $23.25 in cash and $4.50 in Netflix common stock for each share they own. The transaction is expected to close after the previously announced separation of WBD's TV networks division, Discovery Global, into a new publicly traded company, now projected for the third quarter of 2026.
A New Era of Storytelling
The deal brings together two entertainment titans with vastly different origins—Netflix, the Silicon Valley disruptor that began mailing DVDs in the late 1990s, and Warner Bros., a Hollywood institution founded over a century ago.
"Our mission has always been to entertain the world," said Ted Sarandos, co-CEO of Netflix, in a statement. "By combining Warner Bros.' incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters and Squid Game, we'll be able to do that even better."
Greg Peters, co-CEO of Netflix, added: "Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create."
For WBD, the transaction represents an exit strategy from years of stock price struggles. WBD shares had been sluggish since Discovery acquired WarnerMedia in April 2022, but surged dramatically when it emerged as a takeover target, reaching a 52-week high.
"Today's announcement combines two of the greatest storytelling companies in the world," said David Zaslav, president and CEO of Warner Bros. Discovery. "For more than a century, Warner Bros. has thrilled audiences, captured the world's attention, and shaped our culture. By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world's most resonant stories for generations to come."
Crown Jewel Intellectual Property
The acquisition delivers to Netflix an unparalleled content library. Bank of America analyst Jessica Reif Erlich called Warner Bros. Studio, with intellectual property spanning Harry Potter to DC Comics to Game of Thrones, a “crown jewel."
Buyers were "willing to pay for the elimination of a competitor, the acquisition of franchise control, and the synergy potential of integrating one of the most valuable content and IP libraries in the world into their platforms," Erlich wrote.
Netflix expects to realize at least $2-3 billion in annual cost savings by the third year and anticipates the transaction will be accretive to earnings per share by year two.
Industry Concerns and Regulatory Hurdles
The deal has generated significant pushback from Hollywood's theatrical community. "The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business," said Michael O'Leary, president and CEO of Cinema United, the exhibition industry trade organization. "The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns."
The Directors Guild of America issued a sharply worded statement: "The news that Netflix had secured exclusive rights to negotiate for WBD raises significant concerns for the DGA."
On Thursday, Variety exclusively reported that a consortium of A-list talent signed an anonymous open letter to Congress, arguing that the streamer would "effectively hold a noose around the theatrical marketplace."
The transaction faces substantial regulatory scrutiny. Reports suggest that high-ranking White House officials have flagged concerns that a Netflix-WBD merger would give one company too much power over Hollywood.
Netflix has offered a $5 billion breakup fee should the deal fail to close—a significant commitment that signals confidence despite regulatory uncertainty.
To address potential regulatory concerns, Netflix has argued that combining its streaming service with HBO Max would benefit consumers by lowering the cost of a bundled offering.
Netflix plans to maintain Warner Bros.' current operations, including theatrical releases for films. The combined entity would control franchises spanning from The Wizard of Oz to The Batman, from The Sopranos to Squid Game.
As Hollywood awaits regulatory review, one thing is certain: the streaming wars have entered a new and decisive chapter.
