Netflix announced on Friday that it reached a deal to buy Warner Bros. Discovery, bringing an end to the dramatic bidding process that also saw Paramount Skydance and Comcast vying for legacy assets. The deal is for WBD’s film studio and streaming service, HBO Max. Warner Bros. Discovery will still spin out its TV networks, which includes TNT and CNN, as previously planned.
Netflix would gain exclusive long-term control over premium intellectual property while reducing its reliance on external studios as it expands into gaming, live entertainment and broader consumer ecosystems. According to Bloomberg News, Netflix has offered a $5 billion breakup fee if regulators block the deal and that the companies could announce the agreement within days.
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“Our mission has always been to entertain the world,” said Ted Sarandos, co-CEO of Netflix. “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. Together, we can give audiences more of what they love and help define the next century of storytelling.”
David Zaslav, President and CEO of Warner Bros. Discovery said “Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most. 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.”
Netflix also stated that the combination will offer complementary strengths and assets, more choice and value for consumers, more opportunities for the creative community, more opportunities for the creative community, and more value for shareholders.
Rival Paramount had made an initial bid to buy the whole company, including its cable networks, in October. Reuters exclusively reported that Warner Bros. Discovery’s board had rejected Paramount’s mostly cash offer of nearly $24 a share for the company, valuing it at $60 billion, and publicly announced it would evaluate strategic options for the studio.
The news of a potential deal has prompted a consortium of leading film industry figures to urge the U.S. Congress to intervene if Netflix’s bid succeeds, warning of a looming economic and institutional crisis in Hollywood, Variety reported. Paramount also accused Warner Bros. of running an unfair sale process that favors Netflix over other bidders, CNBC reported on Thursday, citing a letter sent by its newly merged media company.
Ahead of Friday’s announcement Emma Wall, chief investment strategist at Hargreaves Lansdown, said the US competition regulator was likely to get involved whoever the winner was. “This will create a global mega power in broadcast entertainment which the regulator will want to look at,” she said.
Tom Harrington, head of television at Enders Analysis, said it was hard to gauge whether the deal would win regulatory approval, but if it went through it would have a massive impact on cinema. He also said that there was likely to be “big reductions” in television and film output from a merged entity, which would lead to resistance to the move from parts of Hollywood and relevant unions.
Harrington also said that the merger was likely to lead to higher costs for consumers. “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 revenues.”