One of Hollywood’s biggest mergers-and-acquisition battles in recent years ended in a bit of a surprise, with Netflix edging past Paramount Skydance and Comcast for the big prize — Warner Bros. Discovery.
Netflix will pay $82.7 billion in a combination of cash and stock to acquire WBD’s studios and streaming businesses following a previously planned company split from its global linear networks. The assets include Warner Bros. film and TV studio operations, HBO and HBO Max, and the DC Universe. The deal also includes a vast array of iconic entertainment IP spanning The Wizard of Oz to The Sopranos.
The bounty describes an equity value of WBD (sans linear cable) of $72 billion, with an additional $10.7 billion of debt. WBD shareholders will receive $27.75 per share, with $23.25 of that coming in cash and $4.50 arriving in the form of Netflix stock.
“I know some of you are surprised that we’re making this acquisition, and I certainly understand why. Over the years, we have been known to be builders, not buyers,” Netflix co-CEO Ted Sarandos said on an investor call Friday morning.
“We already have incredible shows and movies and a great business model, and it’s working for talent, it’s working for consumers and it’s working for shareholders. This is a rare opportunity. It’s going to help us achieve our mission to entertain the world and to bring people together through great stories,” he added.
In its presentation Friday to investors, Netflix specifically mentioned that theatrical releasing will remain a key part of Warner’s film release strategy. How that distribution acumen might fit Netflix, which has famously eschewed theatrical, had been a focal point of pre-deal speculation among pundits and analysts.
Netflix predicted a window of between 12-18 months for the deal to close — specifically, the spin-off of TNT, TBS, CNN and the rest of WBD’s linear cable channels, already planned before the conglomerate put itself up for the bidding, needs to occur first. This is expected to happen in the third quarter of 2026.
The regulatory process isn’t expected to be easy for Netflix.
As part of its offer, Netflix built in a $5.8 billion breakup fee in the event it can’t move its deal past the U.S. Justice Dept.
“Recent media reports about DOJ and Congressional concern suggest that the risks are real,” Wolfe Research analyst Peter Supino wrote in a note sent to investors Friday morning. “The battleground will be market definition. Hawks will focus on the impact on the streaming market which Netflix already leads, while doves will point to the wider video market which is obviously fragmented and highly competitive. At $25.2 last, WBD trades 10% below the deal price, implying moderate regulatory concern.”
Netflix had more than 300 million subscribers worldwide as of the company’s last official reporting of customer metrics, which came at the end of 2024. WBD had around 128 million DTC customers as of the end of the third quarter.