Netflix Seals $72 Billion Deal to Acquire Warner Bros Discovery's Studios and Streaming Business

Netflix (NASDAQ: NFLX) has agreed to purchase the TV, film studios, and streaming operations of Warner Bros Discovery (NASDAQ: WBD) in a blockbuster deal valued at $72 billion. This acquisition would bring some of Hollywood's most prized content, including franchises like Game of Thrones, DC Comics, and Harry Potter, under one roof.

The bidding war heated up over the past few weeks, with Netflix's $28-per-share offer outpacing a competing bid from Paramount Skydance, which had offered around $24 per share for Warner Bros Discovery's entire portfolio including cable TV assets planned for a spin-off. This move aims to shift the balance of power heavily in Netflix's favor against rivals like Walt Disney and Paramount.

Netflix co-CEO Ted Sarandos described the merger as a chance for the combined company to shape the future of storytelling in the decades ahead. It's a bold play for Netflix that had grown its empire primarily through original content rather than acquiring gaming market leaders until now.

However, the agreement is expected to attract significant regulatory scrutiny in the US and Europe, given the size and market dominance the new entity would command, especially with ownership of streaming services including HBO Max, which boasts close to 130 million subscribers. Concerns about reduced competition and impacts on theatrical releases have already been voiced by trade groups and members of Congress.

Netflix has sought to address some of these worries by promising to maintain theatrical releases of studio films and suggesting that the merger would offer consumers a more attractive bundled streaming option that could lower costs. They have also highlighted plans for increased US-based production and expanded investment in original content, potentially generating more jobs and creative opportunities.

The financial structure of the deal combines cash and stock, with Warner Bros Discovery shareholders receiving $23.25 in cash plus about $4.50 in Netflix shares per share. This equates to a premium of over 120% compared to pre-deal speculation prices. The transaction is anticipated to close after Warner Bros Discovery completes a spin-off of its global networks unit, now planned for Q3 2026.

Market reaction has been mixed: Warner Bros Discovery shares gained in premarket trading, while Netflix and Paramount edged lower. Comcast, another interested party, held steady. Both Netflix and Warner Bros Discovery have agreed on breakup fees to provide financial protection should the deal fall through.

Analysts suggest Netflix's acquisition is largely motivated by a desire to secure long-term access to a treasure trove of hit IP and reduce dependence on external studios, especially with its push into gaming reported to be slower than expected. WBD's success in gaming, notably the billion-dollar hit Hogwarts Legacy, adds strategic value to the deal and might deepen Netflix's footprint in interactive entertainment.

Netflix's shares, having surged over 80% last year, have gained a modest 16% this year as questions linger about growth slowing down and uncertainty regarding subscriber metrics since the company stopped releasing detailed numbers earlier. The ad-tier and gaming initiatives are seen as key paths to fuel future growth amidst increased competition.