NEW YORK — Netflix has struck a deal with Warner Bros. Discovery, the legacy Hollywood giant behind "Harry Potter" and "Friends," to buy its studio and streaming business for $72 billion.
The acquisition would bring two of the industry's biggest players in film and TV under one roof and alter the entertainment industry landscape. Beyond its namesake television and motion picture division, Warner owns HBO Max and DC Studios. And Netflix is ubiquitous with on-demand content and has built its own production arm to release popular titles, including "Stranger Things" and "Squid Game."
"For more than a century, Warner Bros. has thrilled audiences, captured the world's attention, and shaped our culture," David Zaslav, CEO of Warner Bros. Discovery, said in a statement Friday. "By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world's most resonant stories for generations to come."
The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of approximately $82.7 billion. The transaction is expected to close in the next 12 to 18 months — after Warner completes its previously-announced separation of its cable operations. Not included in the deal are networks like CNN and Discovery.
The bid will draw tremendous antitrust scrutiny. Beyond TV and movie production, the merger would bring two of the streaming world's biggest names — Netflix and HBO Max — under the same ownership.
If the transaction goes through, Netflix "will cement itself as the Goliath of streaming," said Mike Proulx, a VP research director at Forrester. "This deal changes the calculus of the streaming wars, representing a seismic shift in the entertainment industry."
What the future of both Netflix and HBO Max will look like has yet to be seen. But if the two platforms remain separate subscriptions, users may encounter more "bundle" promotions — and boost content libraries more broadly. Netflix on Friday said that the addition of HBO and HBO Max programming will give its members "even more high-quality titles from which to choose" and "optimize its plans for consumers."
Still, some warn that consolidation across the industry will mean less variety of content — and fewer choices for consumers down the road.
Gaining Warner's legacy studios would mark a notable shift for Netflix, particularly its presence in theaters. Under the proposed acquisition Netflix has promised to continue theatrical releases for Warner's studio films — honoring Warner's contractual agreements for movie releases.
Netflix has kept most of its original content within its core online platform. But there's been exceptions, including qualifying runs for its awards contenders, including this year's "Frankenstein," limited theater screenings of a "KPop Demon Hunters" sing-a-long and its coming "Stranger Things" series finale. Though the streaming company has a policy of not reporting ticket sales, "KPop Demon Hunters" unofficially topped the box office in late August taking in nearly $20 million.
"Our mission has always been to entertain the world," Ted Sarandos, co-CEO of Netflix said in a statement — adding that merging with Warner will "give audiences more of what they love."
Critics say a Netflix-Warner combo would be bad news for people who love to go to movie theaters and for those who work in them. Cinema United — a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally — was quick to oppose the proposed deal, which it said "poses an unprecedented threat to the global exhibition business."
"Netflix's stated business model does not support theatrical exhibition. In fact, it is the opposite," Michael O'Leary, CEO of Cinema United, said Friday — urging regulators to look closely at the impacts. "Theatres will close, communities will suffer, jobs will be lost."
Netflix had previously avoided venturing into other parts of the legacy entertainment landscape. As recently as October — when Warner signaled that it was open to a potential sale of its business — Netflix's Sarandos reiterated on an earnings call that the company had been "very clear in the past that we have no interest in owning legacy media networks" and that there was "no change there."
"We believe that we can be and we will be choosy," Sarandos said at the time, without fully ruling out a potential bid for Warner.
Friday's announcement arrives after a monthslong bidding war for Warner Bros. Discovery. Rumors of interest from Netflix, as well as NBC owner Comcast, started bubbling up in the fall. But Skydance-owned Paramount, which completed its own $8 billion merger in August, had also reportedly made several all-cash offers backed heavily by CEO David Ellison's family.
Paramount seemed like the frontrunner for some time — and unlike Netflix or Comcast, was reportedly vying to buy Warner's entire company, including its cable business housing networks like CNN and Discovery.
Warner announced its intention to split its streaming and studio operations from its cable business in June — outlining plans for HBO, HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, to become part of a new streaming and studios company.
Meanwhile, networks like CNN, Discovery and TNT Sports and digital products such as the Discovery+ streaming service and Bleacher Report would make up a separate cable counterpart called "Discovery Global." Discovery Global is set to become a new publicly-traded company, in a process now expected to be completed in the third quarter of 2026.
Shares of Warner Bros. rose nearly 2% after U.S. markets opened Friday, while shares of Netflix fell nearly 2%. Paramount fell nearly 6%.
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