Netflix announced on Friday that it had reached an agreement to acquire parts of Warner Bros. Discovery, swiftly ending a dramatic bidding process that included Paramount–Skydance and Comcast, both of which had pursued the storied media assets.
The companies said the deal involves cash and stock, valuing Warner Bros. Discovery shares at $27.75 each, placing the transaction at $72 billion in equity value and roughly $82.7 billion in enterprise value.
Under the agreement, Netflix will acquire the Warner Bros. film studio and the HBO Max streaming service. Warner Bros. Discovery will continue executing the planned separation of Discovery Global, which includes its broad portfolio of pay-TV networks such as TNT and CNN.
The deal brings together Netflix — the streaming giant that has reshaped the media industry in recent years — and Warner Bros., a historic studio behind iconic works such as *The Wizard of Oz*, the *Harry Potter* series, and the DC Comics universe, alongside premium HBO Max content including *The Sopranos* and *Game of Thrones*.
Netflix co-CEO Ted Sarandos told investors Friday morning: “I know some of you were surprised we made this move, and I completely understand. For years we’ve been known as builders, not buyers. But this is a rare opportunity… and it will help us advance our mission to entertain the world and bring people together through great stories.”
The acquisition is expected to close after the separation of the television networks, a process now anticipated in the third quarter of 2026. The companies estimate that closing will take 12 to 18 months.
At completion, each Warner Bros. Discovery shareholder will receive $23.25 in cash and $4.50 in Netflix common stock for each WBD share held.
Both boards approved the agreement unanimously, though it remains subject to regulatory clearance and a WBD shareholder vote.
Netflix committed to a $5.8 billion reverse termination fee if the transaction fails to secure required approvals, according to an SEC filing. Warner Bros. Discovery would owe a $2.8 billion breakup fee if it cancels the agreement to merge with another bidder.
Competition With Paramount
The deal may face regulatory scrutiny due to the scale of both companies’ streaming operations. Netflix last reported over 300 million global subscribers by the end of 2024, while WBD had 128 million as of September 30.
The Wall Street Journal reported that Paramount raised antitrust concerns in a letter to WBD this week as part of its own bid submission.
Paramount–Skydance, owned by David Ellison, was the first to express interest in September and submitted three offers before WBD formally launched a sale process. It was the only bidder offering to buy *all* WBD assets — including streaming, film, and TV networks.
Sources told CNBC that Paramount’s final cash bid reached $30 per share on Thursday night, with a $5 billion breakup fee if regulators did not approve the deal within roughly ten months.
Paramount argued earlier this week that WBD “abandoned any pretense of a fair process,” favoring Netflix instead.
A Sudden Turn in the Bidding
For weeks, Paramount appeared the frontrunner in the WBD auction. Executives were confident in their full-company bid and maintained what they described as a “mutually beneficial” relationship with President Donald Trump.
But Netflix shocked the industry with bold, last-minute offers that pushed it ahead, according to people familiar with the negotiations.
Sarandos acknowledged the surprise in his call with analysts Friday, noting that many media mergers fail because acquirers do not understand what they are buying — a risk he said Netflix does not face.
He added that failed deals often involve companies attempting to buy growth after their core business has stalled, something he said does not apply to Netflix given its continued subscriber and earnings momentum.
Antitrust Concerns Loom
A source told CNN that Netflix agreed to a breakup fee comparable to Paramount’s — signaling its confidence but also underscoring the regulatory risk.
Several U.S. lawmakers have already voiced concern about rising market concentration.
Senator Mike Lee wrote on X: “This should ring alarm bells for antitrust authorities worldwide.”
In recent weeks, Paramount had been viewed as the preferred buyer by the Trump administration, and the company repeatedly questioned whether Trump-aligned regulators would approve a Netflix deal.
Analysts now anticipate a broad political and legal battle, not only in the United States but also in Europe, where competition authorities have increasingly strict oversight of media consolidation.
During Friday’s briefing, Netflix executives outlined their initial regulatory argument, emphasizing complementarities and claiming the deal would create “more opportunities for the creative community.”
Co-CEO Greg Peters said: “Warner Bros. has shaped entertainment for more than a century. With our global scale and proven model, we can introduce its worlds to a wider audience — giving members more choice, attracting new viewers, strengthening the industry, and creating greater value for shareholders.”
Skepticism in Hollywood
Cinema operators and industry figures reacted with caution.
United Cinemas, a major theater group, said the merger poses an “unprecedented threat” to the global exhibition sector, citing Netflix’s history of limited theatrical releases.
Netflix responded that it intends to “maintain and build upon” Warner Bros.’ theatrical operations.
A merger of Netflix and HBO would bring an end to one of the defining media rivalries of the past decade. A recent Bank of America analysis stated: “If Netflix acquires Warner Bros., the streaming wars are effectively over. Netflix becomes the undisputed global superpower in Hollywood.”
If you’d like, I can also prepare a shorter markets-focused version or a bullet-point investor brief.
