Netflix says this buy will give users more choices and help it plan better.
It also wants to grow its movie and TV making, and save money for talent and investors, with savings of up to $3 billion every year. If the deal falls through, Netflix would still have to pay Warner Bros. Discovery $5.8 billion as a breakup fee.
The companies announced the deal early Friday, changing the entertainment landscape.
Netflix says it will keep running Warner Bros. as usual, like showing movies in theaters, but details are still unclear. That lack of detail might cause some opposition to the deal.
Netflix also talked to creators, saying that combining its global reach with Warner Bros.' famous movies and shows will offer more opportunities for talent.
It will let them work on popular stories and reach more people than ever.
WBD shareholders will get $23.25 in cash and $4.50 in Netflix shares for each share of WBD stock.
The TV networks part, including CNN and TNT, will be split off and are expected to go public in the third quarter of 2026.
Ted Sarandos said he knows some people are surprised by the deal.
He explained that even though Netflix has been known for making content, this is a rare chance to grow and keep moving forward. He mentioned how Netflix has changed from a DVD company to a global streaming giant.
Greg Peters said the deal will help Netflix grow and strengthen the entertainment industry for years.
He praised Warner Bros. for its long history in entertainment and said combining their strengths will bring more content and options to viewers.
David Zaslav, CEO of Warner Bros.
Discovery, said coming together with Netflix will help share great stories with people all over the world. He highlighted Warner Bros.' long history of making entertainment that resonates with audiences.
Netflix has become the top streaming service, and now it is moving into Hollywood.
The deal is expected to face a lot of regulatory reviews. Meanwhile, it is understood that Netflix made the highest offer, allowing Warner Bros. Discovery to separate its networks and let its CFO become the new leader of that part.
Wall Street analysts think the deal is good because new content drives most of Netflix's viewership.
They say that even though only 5% of titles on Netflix are from the last year, they make up over 20% of the viewing, showing how much content spending affects engagement.
Bank of America analyst Jessica Reif Ehrlich, in a recent report, called the auction of WBD something like this: “The global media industry is on the edge of a big change, and WBD is right in the middle of it.” She said that if Netflix gets the deal for WBD’s studios and streaming parts, it could do a lot at once. She explained, “The fight over WBD’s streaming and studio parts shows how the media world is changing. Mid-sized old media companies can’t keep up with the cost structure of Netflix or the power of big tech companies like Amazon. In the end, an acquisition might be a big deal for both Paramount Skydance and NBCUniversal. So, besides any money benefits, if Netflix takes over WBD, it could help them a lot—because WBD would be part of Netflix, and Paramount and NBCUniversal might struggle to stay competitive.”
Morgan Stanley analyst Benjamin Swinburne also pointed out what Netflix could gain from the deal.
He said, “What’s most interesting for Netflix is that it would get control of some big movie and TV brands that can make money for a long time—like DC Comics, Harry Potter, and Lord of the Rings. It would also get the people, the production stuff, and the global reach to distribute its stuff.”
The same goes for HBO and HBO Max.
Swinburne said, “HBO has its own set of popular TV shows that it made over the years. It also has a brand that people still think of as high-quality TV. HBO has mostly moved to streaming, which means Netflix would have less trouble with the old ways of TV. We think only about 10 to 15 percent of its global subscribers are still paying through traditional TV services.”
The biggest problem with a Netflix-WBD deal is seen as being regulatory issues.
But that’s more of a problem for Netflix than for WBD.
Even before the news about the exclusive talks, Bernstein analyst Laurent Yoon said going with Netflix’s offer was a win-win for WBD.
He wrote, “WBD doesn’t have much to lose—unless it’s a good deal. If they get bought by Netflix, they’d get 85% in cash! Or they could walk away with a lot of money to grow. And more than $5 billion is enough to make over 20 big movies like Superman. That’s not a bad deal either.”
Many in Hollywood are worried about the deal.
Cinema United, a group of theater owners, said in a statement, “The proposed acquisition of Warner Bros. by Netflix poses a huge threat to the global movie theater business.” Their president and CEO, Michael O’Leary, added, “The bad effects of this deal will hurt theaters from the biggest chains to small ones in towns everywhere. Cinema United is ready to help with changes that make more movies and give people more chances to go to the local theater. But Netflix’s business model doesn’t support theaters. In fact, it’s the opposite. Regulators need to look at this deal closely and understand the bad effects it might have on people, theaters, and the entertainment industry.”
The Directors Guild also said the deal raises “serious concerns.”
Now Hollywood has to think about a huge deal that could change the media world in a way never seen before.
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