Netflix has entered into a definitive agreement to acquire Warner Bros. Discovery’s film and television studios, HBO, and HBO Max for an enterprise value of $82.7 billion, which translates to an equity value of $72 billion and a purchase price of $27.75 per WBD share. The deal is structured as a cash‑and‑stock transaction, with WBD shareholders receiving $23.25 in cash and $4.50 in Netflix stock per share, and is subject to regulatory and shareholder approvals. The transaction is expected to close in the third quarter of 2026, following the planned spin‑off of Discovery Global, the company’s linear cable networks, into a separate public entity.
Netflix’s strategic rationale centers on expanding its subscriber base and content library. The acquisition will add roughly 128 million HBO Max subscribers to Netflix’s global footprint and bring a portfolio of high‑profile franchises—including Harry Potter, DC Universe, Friends, and Game of Thrones—into its catalog. The move also positions Netflix to leverage its AI‑driven recommendation engine across a broader content base, potentially boosting engagement and retention. Financing the deal will increase Netflix’s debt load by about $50 billion, in addition to assuming $10.7 billion of WBD’s net debt, raising concerns about leverage and long‑term capital structure.
Financial context for both companies underscores the significance of the deal. Netflix reported Q3 2025 revenue of $11.51 billion, up 17% year‑over‑year, and diluted EPS of $5.87, missing the consensus estimate of $6.89 primarily due to a $619 million expense related to a Brazilian tax dispute. Warner Bros. Discovery posted Q3 2025 revenue of $9.0 billion, down 6% year‑over‑year, and a net loss of $148 million, reflecting declines in linear pay‑TV subscriber numbers, advertising revenue, and the impact of the 2024 Olympics in Europe. Management expects the combined entity to realize at least $2‑$3 billion in annual cost savings by the third year of the transaction, driven by shared production and distribution infrastructure.
Regulatory scrutiny is a key headwind. U.S. and European antitrust authorities are reviewing the combined market share of the two streaming giants, raising the possibility of divestitures or other remedies. Investors have expressed caution over the debt burden and the potential for regulatory delays. In comments, Netflix co‑CEO Ted Sarandos said the acquisition would “enable us to entertain the world even better” by combining Warner’s library with Netflix’s originals. Warner Bros. Discovery CEO David Zaslav emphasized that the deal would “ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.” Netflix co‑CEO Greg Peters highlighted the strategic fit and the opportunity to accelerate growth through the combined creative and production capabilities.
Investors reacted positively to Warner Bros. Discovery’s premium offer, while Netflix investors expressed caution due to the debt increase and regulatory headwinds. The market’s response reflects the perceived value of the content library and subscriber base against the backdrop of potential antitrust hurdles and the need for significant capital outlay.
The acquisition could reshape the competitive landscape of streaming and content creation, consolidating two of the largest entertainment companies into a single entity. Success will hinge on regulatory approval, effective integration of complex operations, and the ability to manage the increased debt burden while delivering on promised synergies. The deal represents a transformative moment for Netflix, potentially redefining its long‑term strategy and positioning in the global entertainment market.
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