Netflix Inc. agreed to buy Warner Bros. Discovery Inc. in a historic combination, joining the world\u2019s dominant paid streaming service with one of Hollywood\u2019s oldest and most revered studios.<\/p>\n\n\n\n
Under the deal announced Friday, Warner Bros. shareholders will receive $27.75 a share in cash and stock in Netflix. <\/p>\n\n\n\n
The total equity value of the deal is $72 billion, while the enterprise value of the deal is about $82.7 billion (R1.4 trillion).<\/p>\n\n\n\n
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. <\/p>\n\n\n\n
That transaction is now expected to be completed in the third quarter of 2026, Netflix said in a statement.<\/p>\n\n\n\n
Netflix shares were down 2.3% in premarket trading in New York. Warner Bros. stock was up about 1%.<\/p>\n\n\n\n
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\u2019s most valuable company, without the benefit of a library or studio, by licensing programs from others and then expanding into original content.<\/p>\n\n\n\n
With the purchase, Netflix becomes owner of the HBO network, along with its library of hit shows like The Sopranos<\/em> and The<\/em> White Lotus<\/em>. Warner Bros. assets also include its sprawling studios in Burbank, California, along with a vast film and TV archive that includes Harry Potter<\/em> and Friends.<\/em><\/p>\n\n\n\n \u201cTogether, we can give audiences more of what they love and help define the next century of storytelling,\u201d Netflix co-Chief Executive Officer Ted Sarandos said in the statement.<\/p>\n\n\n\n Netflix said it expects to maintain Warner Bros.\u2019 current operations and build on its strengths, including theatrical releases for films, a point that had been a cause of concern in Hollywood. <\/p>\n\n\n\n Netflix said the deal will allow it to \u201csignificantly expand\u201d US production capacity and invest in original content, which will create jobs and strengthen the entertainment industry.<\/p>\n\n\n\n Still, the combination is also expected to create \u201cat least $2 billion to $3 billion\u201d in cost savings per year by the third year, according to the statement.<\/p>\n\n\n\n Warner Bros. put itself up for\u00a0sale\u00a0<\/a>in October after receiving interest from several parties. In addition to Netflix, the company was pursued by Paramount Skydance Corp. and Comcast Corp.<\/p>\n\n\n\n Warner Bros. entered into exclusive deal talks with Netflix on Thursday, Blooomberg\u00a0reported<\/a>.<\/p>\n\n\n\n The bidding got contentious, with Paramount accusing Warner Bros. of operating an unfair process that favored Netflix. <\/p>\n\n\n\n Netflix agreed to pay Warner Bros. a termination fee of $5.8 billion if the deal falls apart or fails to get regulatory approval.<\/p>\n\n\n\n The traditional TV business is in the midst of a major contraction as viewers shift to streaming, the world that Netflix dominates. <\/p>\n\n\n\n In the most recent quarter, Warner Bros. cable TV networks division reported a\u00a023% decline<\/a>\u00a0in revenue, as customers canceled their subscriptions and advertisers moved elsewhere.<\/p>\n\n\n\n Founded almost three decades ago as a DVD rental company sending discs to customers by mail, Netflix finished 2024 with $39 billion in revenue. <\/p>\n\n\n\n Warner Bros., founded in the 1920s, had more than $39 billion in sales.<\/p>\n\n\n\n Warner Bros.\u2019 iconic content gives Netflix powerful programming to sustain its lead over challengers like Walt Disney Co. and Paramount. <\/p>\n\n\n\n The deal will certainly face antitrust scrutiny in the US and Europe, and has already raised some red flags.<\/p>\n\n\n\n