streaming

The bidding war is over, and Netflix has been declared the winner.

After flirting with Paramount Skydance and Comcast, Warner Bros. Discovery (WBD) has decided to sell its streaming and movie studios business to Netflix. If approved, the deal is set to overturn the media landscape and create ripples that will affect Hollywood for years.

$72 billion acquisition

Netflix will pay an equity value of $72 billion, or an approximate total enterprise value of $82.7 billion, for Warner Bros. All of WBD has a $60 billion market value, NBC News notes.

The acquisition will take place after WBD completes the split of its streaming and studios businesses, which includes its film and TV libraries and the HBO channel, and its other TV networks, including CNN and TBS, into separate companies (Warner Bros. and Discovery Global, respectively). WBD’s split is expected to finish in Q3 2026.

Additionally, Netflix’s acquisition is subject to regulatory approvals, WBD shareholder approval, and other “customary closing conditions.”

Netflix expects the purchase to net it more subscribers, higher engagement, and “at least $2–3 billion of cost savings per year by the third year,” its announcement said.

Netflix co-CEO Greg Peters said in a statement that Netflix will use its global reach and business model to bring WB content to “a broader audience.”

The announcement didn’t specify what this means for current WBD staff, including WBD’s current president and CEO, David Zaslav. Gunnar Wiedenfels, who is currently CFO of WBD, is expected to be the CEO of Discovery Global after WBD split.

Netflix to own HBO Max

Netflix will have to overcome regulatory hurdles to complete this deal, which would evolve it from a streaming king to an entertainment juggernaut. If completed, the world’s largest streaming service by subscribers (301.63 million as of January) will own its third biggest rival (WBD has 128 million streaming subscribers, most of which are HBO Max users).

The acquisition would also give Netflix power over a mountain of current and incoming titles, including massive global franchises DC Comics, Game of Thrones, and Harry Potter.

If the deal goes through, Netflix said it will incorporate content from WB Studios, HBO Max, and HBO into Netflix. Netflix is expected to keep HBO Max available as a separate service, at least for the near term, Variety reported today. However, it’s easy to see a future where Netflix tries to push subscriptions bundling Netflix and HBO Max before consolidating the services into one product that would likely be more expensive than Netflix is today. Disney is setting the precedent with its bundles of Disney+ and the recently acquired Hulu, and by featuring a Hulu section within the Disney+ app.

Before today’s announcement, industry folks were concerned about Netflix potentially owning that much content while dominating streaming. However, Netflix said today that buying WB would enable it to “significantly expand US production capacity and continue to grow investment in original content over the long term, which will create jobs and strengthen the entertainment industry.”

Uniting Netflix and HBO Max’s libraries could make it easier for streaming subscribers to find content with fewer apps and fewer subscriptions. However, subscribers could also be negatively impacted (especially around pricing) if Netflix gains too much power, both as a streaming company and media rights holder.

In WBD’s most recent earnings report, its streaming business reported $45 million in quarterly earnings before interest, taxes, depreciation, and amortization. Netflix reported a quarterly net income of $2.55 billion in its most recent earnings report.

Netflix hasn’t detailed plans for the HBO cable channel. But given Netflix’s streaming ethos, the linear network may not endure in the long term. But since the HBO brand is valuable, we expect the name to persist, even if it’s just as a section of prestige titles within Netflix.

“A noose around the theatrical marketplace”

Among the stakeholders most in arms about the planned acquisition is the movie theater industry. Netflix’s co-CEO Ted Sarandos has historically seen minimal value in theaters as a distribution method. In April, he said that making movies “for movie theaters, for the communal experience” is “an outmoded idea.”

Today, Sarandos said that under Netflix, all WB movies will still hit theaters as planned, which brings us through 2029, per Variety.

During a conference call today, Sarandos said he has no “opposition to movies in theaters,” adding, per Variety:

My pushback has been mostly in the fact of the long exclusive windows, which we don’t really think are that consumer-friendly. But when we talk about keeping HBO operating, largely as it is, that also includes their output movie deal with Warner Bros., which includes a life cycle that starts in the movie theater, which we’re going to continue to support.

Notably, the executive said that “Netflix movies will take the same strides they have, which is, some of them do have a short run in the theater beforehand.”

Anticipating today’s announcement, the movie theater industry has been pushing for regulatory scrutiny over the sale of WB.

Michael O’Leary, CEO and president of Cinema United, the biggest exhibition trade organization, said in a statement today about the Netflix acquisition:

Regulators must look closely at the specifics of this proposed transaction and understand the negative impact it will have on consumers, exhibition, and the entertainment industry.

In a letter sent to Congress members this month, an anonymous group that described itself as “concerned feature film producers” wrote that Netflix’s purchase of WB would “effectively hold a noose around the theatrical marketplace” by reducing the number of theatrical releases and driving down the price of licensing fees for films after their theatrical release, as reported by Variety.

Up next: Regulatory hurdles

In the coming weeks, we’ll get a clearer idea of how antitrust concerns and politics may affect Netflix’s acquisition plans.

Recently, other media companies, such as Paramount, have been accused of trying to curry favor with US President Donald Trump in order to get deals approved. The US Department of Justice (DOJ) could try to block Netflix’s acquisition of WB. But there’s reason for Netflix and WB to remain optimistic if that happens. In 2017, Time Warner and AT&T successfully defeated the DOJ’s attempted merger block.

Still, Netflix and WB have their work cut out for them, as skepticism around the deal grows. Last month, US Senators Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Bernie Sanders (I-Vt.) wrote to the DOJ’s antitrust division urging that any WB deal “is grounded in the law, not President Trump’s political favoritism.”

In a letter to Attorney General Pam Bondi last month, Rep. Darrel Issa (R-Calif.) said that buying WB would “enhance” Netflix’s “unequaled market power” and be “presumptively problematic under antitrust law.”

In a statement about Netflix’s announcement shared by NBC News today, a spokesperson for the California attorney general’s office said:

“The Department of Justice believes further consolidation in markets that are central to American economic life—whether in the financial, airline, grocery, or broadcasting and entertainment markets—does not serve the American economy, consumers, or competition well.”

Netflix’s rivals may also seek to challenge the deal. Attorneys for Paramount questioned the “fairness and adequacy” of WBD’s sales process ahead of today’s announcement.