Netflix Inc. agreed to buy Warner Bros. Discovery Inc. in a historic combination, joining the world’s dominant paid streaming service with one of Hollywood’s oldest and most revered studios.
Under the deal announced Friday, 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.
Prior to the closing of the sale, Warner Bros. will complete the planned spinoff of its networks division, which includes cable channels such as CNN, TBS and TNT. That transaction is now expected to be completed in the third quarter of 2026, Netflix said in a statement.
Netflix shares were down 2.3% in premarket trading in New York. Warner Bros. stock was up about 1%.
The acquisition marks a dramatic 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 programs 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 that includes Harry Potter and Friends.
“Together, we can give audiences more of what they love and help define the next century of storytelling,” Netflix co-Chief Executive Officer Ted Sarandos said in the statement.
Netflix said it expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films, a point that had been a cause of concern in Hollywood. Netflix said the deal will allow it to “significantly expand” US production capacity and invest in original content, which will create jobs and strengthen the entertainment industry.
Still, the combination is also expected to create “at least $2 billion to $3 billion” in cost savings per year by the third year, according to the statement.
Warner Bros. put itself up for sale in October after receiving interest from several parties. In addition to Netflix, the company was pursued by Paramount Skydance Corp. and Comcast Corp. Warner Bros. entered into exclusive deal talks with Netflix on Thursday, Blooomberg reported.
The bidding got contentious, with Paramount accusing Warner Bros. of operating an unfair process that favored Netflix. Netflix agreed to pay Warner Bros. a termination fee of $5.8 billion if the deal falls apart or fails to get regulatory approval.
The traditional TV business is in the midst of a major contraction as viewers shift to streaming, the world that Netflix dominates. In the most recent quarter, Warner Bros. cable TV networks division reported a 23% decline in revenue, as customers canceled their subscriptions and advertisers moved elsewhere.
Founded almost three decades ago as a DVD rental company sending discs to customers by mail, Netflix finished 2024 with $39 billion in revenue. Warner Bros., founded in the 1920s, had more than $39 billion in sales.
Warner Bros.’ iconic content gives Netflix powerful programming to sustain its lead over challengers like Walt Disney Co. and Paramount. The deal will certainly face antitrust scrutiny in the US and Europe, and has already raised some red flags.
California Republican Darrell Issa wrote a note to US regulators objecting to any potential Netflix deal, saying it could result in harm to consumers. Netflix has argued that one of its biggest competitors, however, is Alphabet Inc.’s YouTube.
Netflix’s interest in Warner Bros. also sent shivers through Hollywood. The company has largely refused to release films in theaters, occasionally giving its original movies limited runs in cinemas.
Under terms of the agreement, Warner Bros. shareholders will receive $23.25 in cash and $4.50 in Netflix common stock. The transaction is expected to close in 12-18 months.
Moelis & Co. is Netflix’s financial adviser. Wells Fargo is acting as an additional financial advisor and, along with BNP Paribas and HSBC Holdings, is providing $59 billion in debt financing, according to a regulatory filing.
Allen & Co., JPMorgan Chase & Co. and Evercore are serving as financial advisers to Warner Bros. Discovery.
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