Netflix to acquire Warner Bros Discovery’s film and streaming units for US$72bn

In a historic agreement set to reshape the entertainment industry, Netflix has announced it will acquire Warner Bros Discovery’s film and streaming divisions—including HBO Max and HBO—in a deal valued at US$72 billion (£54 billion).

The move combines two of the most influential entities in Hollywood, uniting Netflix’s streaming dominance with Warner Bros’ century-long legacy in film and television.

The agreement concludes a drawn-out bidding war, with Netflix prevailing over Comcast and a Paramount-Skydance consortium. The acquisition comprises US$27.75 per Warner Bros share, combining cash and stock, and represents a total enterprise value of approximately US$82.7 billion.

Netflix co-chief executive Ted Sarandos described the deal as a rare and transformative opportunity. “By combining Warner Bros’ incredible library of shows and movies with our culture-defining titles, we can help define the next century of storytelling,” he said.

The acquisition encompasses major intellectual properties including Game of Thrones, Harry Potter, The Sopranos, and DC Universe franchises, which will now sit alongside Netflix originals such as Stranger Things, Wednesday, and Squid Game. The company aims to preserve Warner Bros’ current studio operations and continue theatrical film releases.

Co-chief executive Greg Peters noted the importance of the HBO brand, suggesting it will play a key role in future offerings but said specifics would be addressed later. “It’s quite early to get into the specifics of how we’re going to tailor this offering,” he said.

Sarandos acknowledged that the merger may surprise some stakeholders but framed it as a necessary evolution. “It’s a big day for both companies… this is about setting up Netflix for success for decades to come.”

The deal still faces significant regulatory scrutiny. The US Federal Trade Commission and other global antitrust authorities are expected to closely examine the impact on competition. Netflix said it was “highly confident” of securing the necessary approvals, with completion targeted for late 2026 following Warner Bros Discovery’s planned separation of its Global Networks division into a new company named Discovery Global.

The restructuring will leave TNT Sports International and other key entertainment assets, including CNN and Discovery+, with Discovery Global, while the film and streaming components will transition to Netflix.

According to Paolo Pescatore of PP Foresight, the merger underscores Netflix’s ambitions to lead in a rapidly evolving streaming landscape. However, he warned of operational complexities, saying: “It could provide a headache for Netflix when trying to combine the companies given the size of the deal.”

Netflix estimates the merger will generate between US$2 billion and US$3 billion in annual cost savings by eliminating redundancies, primarily in technology and support areas. These efficiencies are expected to be realised within three years and contribute to earnings per share growth by the second year post-merger.

Concerns have been raised by industry stakeholders. The Directors Guild of America expressed “significant concerns” about the deal, and television analyst Tom Harrington said the move could lead to reductions in content output and job losses. “Were it to go through it would reorient Hollywood,” Harrington said.

Danni Hewson, head of financial analysis at AJ Bell, praised the decision to maintain theatrical releases but noted potential pricing issues. “How much of those savings get passed to streaming platform subscribers or whether Netflix will be seen to have too much pricing power is one of the areas that will face a huge amount of scrutiny,” she stated.

Despite the uncertainty, both boards of directors have unanimously approved the transaction, signalling confidence in the strategic rationale. The stock element of the deal is subject to a pricing collar, with Warner Bros shareholders receiving a mix of cash and Netflix shares dependent on market conditions.

Netflix intends to enhance its production capacity in the United States and invest further in original content, with a view to creating more value for talent and consumers. The company stated the merger would “create greater value for talent—offering more opportunities to work with beloved intellectual property”.

The transaction is expected to close 12 to 18 months after Warner Bros Discovery’s corporate separation, subject to shareholder approval, regulatory clearance, and standard closing conditions. Moelis & Company is acting as Netflix’s financial advisor, with legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP. Warner Bros is advised by Allen & Company and J.P. Morgan.

The merger positions Netflix as a global content powerhouse and signals a further consolidation of the entertainment industry, with potential implications for content pricing, availability, and employment across Hollywood.