Netflix has agreed to acquire the film and streaming businesses of Warner Bros Discovery in a landmark $72 billion (£54bn) deal, creating one of the most powerful entertainment giants in Hollywood. The streaming platform beat out major competitors including Comcast and Paramount Skydance, after a lengthy bidding battle.
Warner Bros’ properties include iconic franchises like Harry Potter, Game of Thrones, and its streaming service HBO Max. The acquisition, however, still requires approval from global competition authorities.
Netflix co-CEO Ted Sarandos expressed confidence that regulators will grant approval, saying the company is moving “full speed” toward finalizing the deal. “Warner Bros have defined the last century of entertainment, and together we can define the next one,” he said. Sarandos added that combining Warner’s extensive library with Netflix hits such as Stranger Things will “help define the next century of storytelling.”
Netflix co-CEO Greg Peters said the HBO brand would remain important to consumers, though he noted it was “quite early to get into the specifics” of how offerings will be structured.
Netflix expects $2–3 billion in cost savings, largely by cutting overlapping technology and support operations. The streamer also confirmed that Warner Bros films will continue to receive theatrical releases, and Warner Bros Television will still produce content for outside platforms. Netflix’s own original-production strategy remains unchanged.
Warner Bros CEO David Zaslav called it a “big day” for both companies. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come,” he said.
The deal values Warner Bros at $82.7 billion including debt, with the $72 billion representing its equity value. Both boards of directors unanimously approved the agreement.
However, the merger has sparked concern in the cinema industry. Michael O’Leary, CEO of Cinema United, warned the deal poses “an unprecedented threat” to global movie theaters, from major chains to single-screen independents. “The negative impact of this acquisition will impact theatres … around the world,” he said.
Before closing, Warner Bros must complete its planned split of business units. Its global networks division including CNN, Discovery channels, and TNT Sports in the U.S. will spin off into a new company, Discovery Global. TNT Sports International will remain with the streaming and studios division sold to Netflix.
Industry analysts said the acquisition will dramatically reshape Hollywood. Paolo Pescatore of PP Foresight described it as “a huge statement of intent” but warned Netflix may face challenges integrating the massive business. Tom Harrington of Enders Analysis predicted resistance within Hollywood and potential “big reductions” in TV and film production if the deal is approved.
For consumers, Harrington warned the outcome could mean higher prices:
“Netflix would get more expensive … the greater penetration of Netflix households would likely mean an increase in total overall subscription revenues.”
Financial analyst Danni Hewson said Netflix offered “an olive branch” to Hollywood by promising theatrical releases for Warner Bros films. She noted that regulatory approval remains the biggest obstacle: “How much of those savings get passed to streaming platform subscribers or whether Netflix will be seen to have too much pricing power is one of the areas that will face a huge amount of scrutiny.”
Source: BBC