Netflix announced a definitive agreement to acquire Warner Bros. Discovery’s film and television studios and its HBO Max streaming service for an enterprise value of $82.7 billion, valuing the assets at $27.75 per WBD share and an equity value of $72 billion. The deal will transfer ownership of Warner Bros.’ extensive library—including franchises such as Harry Potter, DC Comics, and Game of Thrones—and the HBO Max platform to Netflix, with the transaction expected to close after WBD completes its planned spin‑off of its global networks division into a separate public company, Discovery Global, in the third quarter of 2026.
The acquisition marks a strategic pivot for Netflix from a content aggregator to a content owner with a vast studio infrastructure. For WBD, the sale is part of a broader restructuring that will split the company into a “Streaming & Studios” entity and a “Global Networks” entity, allowing each to focus on core strengths and unlock shareholder value. The deal also accelerates industry consolidation, positioning Netflix to compete more aggressively against Disney, Amazon, and other tech‑heavy entrants by adding a deep catalog and production capabilities that can drive subscriber growth and content differentiation.
Financially, Netflix will finance the purchase with a mix of cash, stock, and up to $59 billion of new debt, raising its leverage but enabling it to realize an estimated $2‑3 billion in annual cost savings by the third year after closing. The transaction is projected to be accretive to GAAP earnings per share by year two, reflecting the scale of the combined content library and the anticipated synergies in distribution and production. WBD’s revenue has been declining year‑over‑year for the twelve months ending September 30 2025 and for the full year 2024, while Netflix has shown steady revenue growth, underscoring the strategic rationale for the deal.
Market reaction to the announcement was mixed. WBD’s shares rose between 1.2% and 2.7% in pre‑market trading, reflecting investor optimism about the spin‑off and the sale of its studio assets. Netflix’s shares fell between 2.3% and 3.0%, driven by concerns over the large debt load, the valuation premium paid, and the regulatory scrutiny the transaction is expected to face in the U.S. and Europe. Analysts noted that while the deal offers long‑term growth potential, the short‑term financial burden and antitrust hurdles could temper enthusiasm.
Management emphasized the strategic fit and future opportunities. Netflix co‑CEO Ted Sarandos said the acquisition would “cement Netflix as the Goliath of streaming” and expand its content portfolio, while WBD CEO David Zaslav highlighted the benefits of combining two iconic storytelling companies to serve audiences worldwide. Co‑CEO Greg Peters added that Netflix would maintain Warner Bros.’ theatrical release operations and that the combined entity would pursue new creative ventures. The deal also includes a $5.8 billion breakup fee if regulatory approval is not obtained, and a $2.8 billion fee if WBD delays or cancels the transaction.
The transaction faces significant regulatory scrutiny, with U.S. and European antitrust authorities likely to examine the concentration of content ownership and the potential impact on competition. Integration challenges include aligning two large content libraries, consolidating production pipelines, and deciding the future of the HBO Max brand—whether it will be merged into Netflix or remain a separate service. These factors will shape the execution timeline and the ultimate value creation from the deal.
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