Netflix buys Warner Bros. Discovery in blockbuster $82.7 billion deal

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Beats Paramount and Comcast in bidding

Deal includes HBO and HBO Max; does not include WBD’s cable networks, which will be spun off

Passing regulatory tests could be difficult

In a move that gained steam in the 24 hours before it was announced, Netflix is buying Warner Bros. Discovery for $82.7 billion, closing a period during which two other bidders emerged for the company, including Paramount Skydance and Comcast, owner of NBCUniversal. 

This came a day after Paramount Skydance officials sent a letter to Warner Bros. Discovery executives, criticizing the bidding process and favoring Netflix. Indeed, Netflix entered into an exclusive negotiating period Thursday night, and the deal was announced Friday morning. The cash and value transaction of this deal is for $27.75 per WBD share, totaling $82.7 billion ( with an equity value of $72 billion.)

Netflix will gain Warner Bros.’ historic studio, including its TV and film operations and its vast library, with titles ranging from The Wizard Of Oz to Harry Potter, TV shows from Full House to The Big Bang Theory, and current TV product ranging from The Jennifer Hudson Show to Georgie & Mandy’s First Marriage. Netflix also gains rights to the Looney Tunes and Hanna-Barbera libraries, whose iconic characters include Bugs Bunny, Daffy Duck, Yogi Bear, and The Flintstones. Netflix also gets premium cable channel HBO and streamer HBO Max. 

The deal does not include Warner Bros. Discovery’s basic cable channels (including CNN, Discovery, and TCM), which will be spun off to Discovery Global Networks, following an original plan announced last summer when WBD planned to split its company into two. Discovery retains all of its sports rights, including NASCAR, Major League Baseball, and the NHL, which air on TNT TBS, and TruTV.

“Our mission has always been to entertain the world,” said Ted Sarandos, co-CEO of Netflix. “By combining Warner Bros.’ incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters, and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”

Not bad for a company founded as a DVD mail service in August 1997, which pioneered streaming in the 2010s and along the way, became a global streaming powerhouse. While evaluating the most influential media creations and events during the 2010s, I wrote in December 2019: “In 2013, Netflix decided to “stream” as TV show called House of Cards, dropping all episodes at once – and changed the TV business forever. The company once known for renting DVDs by mail became a global powerhouse in entertainment and opened the door to a brand new way to consume our favorite shows.”

“Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most,” said David Zaslav, President and CEO of Warner Bros. Discovery. “For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture. By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.” Zaslav is expected to remain in a lead role at the Warner Bros. studio. 

Mere minutes after the deal was announced, opponents of the deal came out swinging. 

“The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent. The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers. Industry workers along with the public are already impacted by only a few powerful companies maintaining tight control over what consumers can watch on television, on streaming, and in theaters. This merger must be blocked,” said the Writers Guild of America, as the Producers Guild and the Directors Guild also showed concern, but SAG-AFTRA passed on making any immediate judgment on the deal.

The news received almost universal thumbs down on Capitol Hill, from Republicans and Democrats alike over potential anti-trust issues, signaling the Justice Department may not look favorably on the deal, and it could be blocked. President Donald Trump had been pushing Paramount Skydance to acquire the studio, given that CEO David Ellison and his father, Oracle founder Larry Ellison, have strong ties to the Trump administration, which viewed the deal with “heavy skepticism”. Trump himself has yet to weigh in on the deal, but he’ll likely do so soon. 

And while they didn’t officially comment, the NAB and several large TV station groups cited Netflix (though not by name) as a reason to consolidate, as they referenced Big Tech’s dominance as a reason to do so and to eliminate the ownership cap, which currently stands at 39 percent of the country. Nexstar is currently awaiting FCC approval to acquire Tegna for $3.6 billion, which would expand its portfolio to 265 stations. The FCC will not be involved in the Netflix-Warner Bros. merger, as neither holds any TV or radio licenses. 

But Netflix defended its deal in its press release, stating it would create more choice for consumers, a stronger entertainment industry, and more opportunities for the creative community. 

Paramount’s next move

While the battle for Warner Bros. looks settled, it may not be over. 

Paramount’s Ellison is mulling what to do next, including the possibility of launching a hostile bid to buy WBD (taking this directly to their shareholders), as company officials believe the bidding process was “rigged”, and may try to block the deal at the Justice Department. Paramount was the only bidder interested in purchasing the entire company, as it plans to retain its cable networks, unlike Comcast, which spun off all but two channels to a separate company, Versant. 

As for Netflix, it is another surprising turn. Netflix invested in mostly scripted programming and offered only one commercial-free tier. But as rivals such as Disney Plus gained momentum (and as strange as it sounds, it experienced a slump in 2022.), Netflix had to evolve by introducing ad tiers and adding sports – something they once said they would never do. Now they’re the home of Christmas NFL games, MLB’s Opening Night Game and the Home Run Derby, and WWE Raw. 

What’s next 

If Netflix-Warner Bros. clears these regulatory hurdles and successfully fends off Ellison, the deal is expected to close in twelve to eighteen months. If it doesn’t, both have agreed to a breakup fee of $5.8 billion. This merger raises several questions, including the future of movie theaters as owners are known to be hostile toward Netflix (the AMC multiplex at Ford City is the last one remaining on Chicago’s South Side – and its future is in question as the mall is likely to close next year), and the usual monopoly and antitrust talk that comes with these kinds of media deals. Among streamers, Netflix has the most subscribers globally, while rival HBO Max is third. 

It’s too early to tell if HBO and HBO Max would fold into Netflix, but the HBO name may be too strong to do so. The brand has been associated with television’s most iconic series: The Sopranos, Game of Thrones, True Blood, etc. It would be too culturally significant to see it disappear.

There’s also concern about further job losses in Hollywood, as we have already seen Paramount Skydance eliminate more than a thousand jobs following their merger, and more are on the way. Netflix would also have more leverage over producers, unions, and others as it grows in size, trying to stay relevant in an era with free video options such as YouTube and TikTok. The merger also gives Netflix extraordinary leverage over consumers since they will likely raise prices because someone has to pay for this, and unfortunately, it will be us. 

This deal continues tech’s march into Hollywood, as we have already seen Amazon take over MGM in recent years. We’re seeing the nature of television change in recent years, and not for the better. The Netflix-Warner Bros. Discovery deal is just another reminder of when media companies grow in size, their footprint shrinks for everybody else.