On Friday morning, Netflix announced an agreement to acquire Warner Bros.’ film and TV studios, HBO and HBO Max and DC Entertainment in a cash-and-stock deal that values the assets at about $82.7 billion, including debt. The equity portion of the deal is $72 billion.
The transaction, per Newsweek, follows a monthslong bidding war against Comcast and Paramount Skydance. The announcement came as Warner Bros. Discovery prepares to split into two companies:
- Warner Bros. — studios, HBO/HBO Max, DC and the major content libraries, this is what Netflix is buying.
- Discovery Global — the “Global Linear Networks” business, including CNN, TBS, TNT, HGTV and other cable channels, which will remain a separate, publicly traded company.
The deal is expected to close in the next 12 to 18 months, after that breakup is complete and regulators sign off in the U.S. and abroad, said Ted Sarandos, Netflix co-CEO in a Friday morning investor webinar.
CNN vs. ‘Harry Potter’: Who ends up where?
One of the simplest ways to understand the deal is to ask what happens to three big pillars of the century-old Warner Bros. empire:
- Warner Bros. film and TV studios and their libraries — the home of “Harry Potter,” the DC Universe, “The Lord of the Rings” films, the MonsterVerse and more would be part of Netflix.
- HBO and HBO Max — including shows like “Game of Thrones,” “Friends” and “Sopranos,” are also part of the package and would ultimately join Netflix if the deal closes.
- CNN, TBS, TNT and other cable channels are being carved out into Discovery Global and will not be owned by Netflix.
The press release states that “Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films,” meaning shows under production, such as the new “Harry Potter” series, will continue.
What Netflix says it’s getting — and why it thinks this is the right time
On Friday morning’s call, Netflix leaders tried to get ahead of concerns by stressing both consumer value and the hard lessons of past mega-mergers.
Sarandos said that “these assets are more valuable in our business model and our business model is more valuable with these assets,” arguing that putting Warner Bros. franchises directly into Netflix’s global subscription machine will generate more viewing and more revenue over time.
Co-CEO Greg Peters acknowledged Wall Street’s nerves about another giant media deal: “There is a long, long history of media transactions that do not end well.” But he said Netflix believes the company now has the scale, technology and data to actually make a library this big work.
Peters also framed the deal as a win for subscribers, saying it will give them more “choice and value” and, in his words, “more bang for their buck” inside a probable future bundle subscription, instead of forcing people to juggle multiple.
Netflix and Warner Bros. project roughly $2 billion to $3 billion in annual cost savings within three years of closing — money they say will be reinvested in new programming and used to keep prices competitive.
Why filmmakers, theaters and some politicians are worried
Not everyone is celebrating.
According to Variety, a group of prominent producers and directors urged Congress to scrutinize and speak out against the merger, warning it would give Netflix outsized leverage over how and where movies are shown.
The group argued that if the deal goes through, Netflix would “effectively hold a noose around the theatrical marketplace,” pointing to the company’s track record of prioritizing streaming over long theater runs.
Cinema United, a major trade group for theater owners, also spoke out against the proposed merger as an “unprecedented threat” to cinemas, saying that concentrating so many major franchises in the hands of one streamer could mean fewer titles getting wide theatrical releases and more being pushed quickly – or exclusively – to Netflix.
On the political side, Sen. Elizabeth Warren, D-Mass., released a statement saying the deal “looks like an anti-monopoly nightmare” and warned that a combined Netflix–Warner Bros. would create “one massive media giant with outsized power over what Americans watch.”
Former WarnerMedia CEO Jason Kilar posted that the deal is one of the most effective ways to reduce competition in Hollywood. Paramount Skydance, who was also interested in acquiring Warner Bros. said that the process was done incorrectly.
A letter from Paramount attorneys to Warner Bros. Discover CEO, David Zaslav, argued that the process of bidding was “a myopic process with a predetermined outcome that favors a single bidder,” per CNBC,
What the legal fight will likely look like
Netflix will still have to convince regulators in both Washington and Brussels that the merger won’t hurt competition.
The Justice Department’s Antitrust Division is expected to lead the U.S. review. According to Newsweek, at least one senior White House official has expressed “heavy skepticism” about the deal, a stance that “portends a lengthy and difficult DOJ antitrust review.”
According to Deadline, EU antitrust experts say Brussels is unlikely to block the deal outright but could impose conditions.
What this could mean for viewers
In the short term, nothing changes overnight. Deals of this size typically take 12 to 18 months to close with approvals, and both companies say it’s business as usual for now.