Netflix to Acquire Warner Bros for $83 Billion: What This Mega Deal Means for the Entertainment Industry and Investors
Netflix has announced its plan to acquire Warner Bros. Discovery’s studio and streaming business in a landmark deal that is set to reshape Hollywood and the broader media industry. The cash-and-stock transaction values the business at $82.7 billion, including debt. The acquisition is anticipated to close once Warner Bros. Discovery completes the spin-off of its cable unit, which includes channels such as CNN, TNT, and Discovery. This separation is expected by the third quarter of 2026, resulting in a distinct public company controlling these cable channels.
Currently boasting over 300 million subscribers, Netflix is the world’s largest paid streaming service. The merger with Warner Bros. Discovery’s assets would create a media giant with significant influence over theater chains and entertainment unions, potentially prompting smaller competitors to consolidate in response.
This acquisition marks a pivotal moment in the ongoing tech takeover of Hollywood. Unlike other tech companies, which have mainly grown organically, Netflix is pursuing a major studio acquisition. For context, Amazon recently completed its $8.5 billion purchase of Metro-Goldwyn-Mayer, known for franchises like James Bond and Rocky.
Netflix co-CEO Ted Sarandos emphasized the necessity of innovation amid an abundance of entertainment choices, stating, “We need to keep innovating and investing in stories that matter most to audiences, and that’s what this deal is all about. The combination of Netflix and Warner Bros. creates a better Netflix for the long run.”
The deal followed a competitive bidding process involving Netflix, Comcast, and Paramount. Netflix’s offer mainly consisted of cash. Comcast has been bidding for Warner Bros. Discovery’s studios and HBO Max streaming service, while Paramount’s CEO, David Ellison, has sought to acquire all of Warner Bros. Discovery, including its cable channels.
Notably, Netflix’s proposal includes a commitment to continue theatrical releases for Warner Bros. Discovery films, marking a departure for a company that pioneered at-home viewing and has yet to fully embrace the box office.
Netflix has never before pursued an acquisition of this magnitude. The move surprised industry insiders, given Netflix’s historic preference for growth through internal development rather than acquisitions. Co-CEO Greg Peters acknowledged the company’s limited experience with large-scale deals but described the acquisition as a natural evolution for Netflix, which has transformed significantly since mailing its first DVD in 1998.
Regulatory approval is required both in the United States and Europe. The regulatory review will consider how to define the major players in a media industry increasingly shaped by technology firms like Apple and Amazon. Netflix argues that the content consumption market extends beyond streaming alone and that merging Netflix and Warner Bros. streaming services will benefit consumers now paying for both.
Concerns have been raised by a group of anonymous feature film producers who sent a letter to Congress warning of potential harm to theatrical exhibition and the risk of monopolistic control over streaming. The producers requested anonymity due to fear of retaliation.
If the deal fails to secure the necessary approvals, Netflix is obligated to pay Warner Bros. Discovery a $5.8 billion breakup fee—one of the largest in recent deal history. The agreement also includes clauses to deter Warner Bros. Discovery from soliciting higher bids from competitors, with penalties if they choose a superior offer from Paramount or Comcast.
Warner Bros. represents a storied legacy in Hollywood, with a 100-year-old film library featuring classics such as “Casablanca,” “The Maltese Falcon,” and more recent hits like “The Shining” and “Chariots of Fire.” The studio also holds rights to MGM classics including “The Wizard of Oz” and “Gone With the Wind.” In recent months, Warner Bros. has enjoyed a robust box office streak with eight consecutive hits, including Oscar contenders.
HBO, a premium television leader, continues to dominate with acclaimed series like “Euphoria,” “The Gilded Age,” and “The White Lotus.” By acquiring Warner Bros., Netflix gains control over iconic properties including Bugs Bunny and hit TV shows like “Friends” and “Game of Thrones,” substantially enhancing its content portfolio.
While Netflix has successfully created popular original shows such as “Stranger Things” and “KPop Demon Hunters,” analysts note it has lacked the enduring, multigenerational franchises that Warner Bros. brings, which generate sustained viewer engagement.
This story was originally reported by The New York Times.
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