NEW YORK — Netflix struck a deal Friday to buy Warner Bros. Discovery, the Hollywood giant behind “Harry Potter” and HBO Max, in a $72 billion deal that would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.
If approved by regulators, the merger would put two of the world’s biggest streaming services under the same ownership — and join Warner’s television and motion picture division, including DC Studios, with Netflix’s vast library and its production arm, which has released popular titles such as “Stranger Things” and “Squid Game.”
“For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture,” David Zaslav, CEO of Warner Bros. Discovery, said in a statement. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt. The transaction is expected to close in the next 12 to 18 months after Warner completes its previously announced separation of its cable operations. Not included in the deal are networks such as CNN and Discovery.
The proposed merger could draw intense antitrust scrutiny, particularly for its effect on streaming subscriptions.
“Netflix is the top streaming service today. Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry,” said Mike Proulx, vice president and research director at Forrester, a market research company.
Will streaming services stay separate or combine?
One of the big unanswered questions, Proulx added, is whether HBO Max and Netflix would “stay as separate streaming services or combine into a mega streaming service.”
But either way, he said, customers could see some price relief in the form of a single subscription bill or bundle promotions, which would be a welcome change as streaming prices continue to rise and consumers feel the pinch of paying for multiple services.
Of course, that all depends on whether the deal goes through. Netflix on Friday maintained that the addition of HBO and HBO Max programming will give its members “even more high-quality titles from which to choose” and “optimize its plans for consumers.”
Others warned that a Netflix-Warner combo could create an even bigger entertainment titan with ramifications for both consumers and people working across the film and TV industry.
Gaining Warner’s legacy studios would mark a notable shift for Netflix, particularly its presence in theaters. Under the proposed acquisition, Netflix has promised to continue theatrical releases for Warner’s studio films, honoring Warner’s contractual agreements for movie releases.
Netflix has kept most of its original content within its core online platform. But there have been exceptions, including qualifying runs for its awards contenders, including this year’s “Frankenstein,” limited theater screenings of a “KPop Demon Hunters” sing-a-long and its coming “Stranger Things” series finale.
Though the streaming company has a policy of not reporting ticket sales, “KPop Demon Hunters” unofficially topped the box office in late August taking in nearly $20 million.
“Our mission has always been to entertain the world,” Ted Sarandos, co-CEO of Netflix said in a statement, adding that merging with Warner will “give audiences more of what they love.”
Critics question potential effect on moviegoers and theaters
Critics say a Netflix-Warner combo would be bad news for people who love to go to movie theaters and for those who work in them. Cinema United — a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally — was quick to oppose the proposed deal, which it said “poses an unprecedented threat to the global exhibition business.”
“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” Michael O’Leary, CEO of Cinema United, said Friday, urging regulators to look closely at the impacts. “Theaters will close, communities will suffer, jobs will be lost.”
Netflix had previously avoided venturing into other parts of the legacy entertainment landscape. As recently as October — when Warner signaled that it was open to a potential sale of its business — Netflix’s Sarandos reiterated on an earnings call that the company had been “very clear in the past that we have no interest in owning legacy media networks” and that there was “no change there.”
Warner Bros., which is 102 years old, is one of the “big five” studios left in Hollywood. If the Netflix sale goes through, the remaining legacy studios would be Disney, Paramount, Sony Pictures and Universal.
Friday’s announcement arrived after a monthslong bidding war for Warner Bros. Discovery. Rumors of interest from Netflix, as well as NBC owner Comcast, started bubbling up in the fall. Skydance-owned Paramount, which completed its own $8 billion merger in August, also reportedly made several all-cash offers.
Paramount seemed like the front-runner for some time — and unlike Netflix or Comcast, was reportedly vying to buy Warner’s entire company, including its cable business housing CNN and Discovery.
Paramount did not immediately respond to a request for comment Friday from The Associated Press.
Regulators and politics could decide fate of deal
While Netflix’s bid won over Warner’s approval, experts stressed that a bumpy regulatory road lies ahead.
“No doubt politics are going to come into play,” Proulx said. He pointed particularly to the Trump administration’s relationship with the family of Larry Ellison, whose son David runs Paramount, and reports of that company’s frustrations over the sale process — both of which, he noted, “can’t be ignored as part of the calculus as to the outcome of all of this.”
Warner announced its intention to split its streaming and studio operations from its cable business back in June, outlining plans for HBO, HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group and DC Studios, to become part of a new streaming and studios company.
Meanwhile, networks such as CNN, Discovery and TNT Sports and digital products such as the Discovery+ streaming service and Bleacher Report would make up a separate cable counterpart called “Discovery Global.” Discovery Global is set to become a new publicly traded company, in a process now expected to be completed in the third quarter of 2026.
Shares of Warner Bros. rose nearly 2 percent after U.S. markets opened Friday, while shares of Netflix fell nearly 2 percent. Paramount fell nearly 6 percent.
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Wyatte Grantham-Philips and Matt Ott, Associated Press. Ott reported from Washington. AP Film Writer Lindsey Bahr in Pittsburgh contributed to this report.
