Netflix to buy Warner Bros. for nearly $83 billion
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The iconic Warner Bros water tower at its California studio. Photo: Mario Tama/Getty Images
Netflix said Friday it will acquire Warner Bros. Discovery's studio and streaming assets for an enterprise value of nearly $83 billion, besting Paramount Skydance and Comcast.
Why it matters: It's a stunning conclusion to what became one of the most expensive bidding wars in media history.
By the numbers: Netflix will pay shareholders of WBD $23.25 cash and $4.50 in Netflix stock for each WBD share they hold.
- The equity value of the deal is $72 billion, while the total enterprise value (including debt) is $82.7 billion.
- Barring any regulatory hurdles, the deal will close after WBD completes the planned separation of its streaming and studio business from its television networks in the third quarter of 2026.
Zoom in: According to the agreement, Netflix has agreed to pay WBD a $5.8 billon breakup fee, should the deal fail to close for any reasons.
- That high number suggests executives are not concerned about possible regulatory setbacks.
- On a call with investors, Netflix co-CEO Ted Sarandos said he believed the deal to be "pro-consumer," "pro-creator" and "pro-innovation" and signaled that he was not worried about regulatory approvals.
- He and WBD executives also suggested that both parties are focused on closing this deal, instead of continuing to entertain other bids. "We've signed a deal [and] we are running full speed toward regulatory approval," Sarandos said.
Between the lines: Netflix doesn't plan to change Warner Bros. Pictures' theatrical release strategy, and will continue releasing its films in theaters, Sarandos said.
- He also said the company planned to continue having Warner Bros. studios produce television shows for third parties, despite the fact that that Netflix itself doesn't do so.
- In the short term, the company intends to keep the HBO Max streaming service as a separate offering, but said it would include HBO content in its service.
Zoom out: Sarandos told investors Friday they should view the deal as an investment in content spending.
- The company said the deal will allow Netflix to "significantly expand U.S. production capacity."
- Netflix and WBD expect between $2 billion and $3 billion in annual synergies after the deal.
Catch up quick: WBD's plan to split into two businesses next year turned into an auction in late October after Paramount Skydance raised the prospect of an offer.
- Netflix and Comcast quickly followed.
- When it became clear that WBD was entering exclusive talks with Netflix, Paramount lawyers sent a letter to WBD's board signaling the bidding process was unfair.
- Unlike Paramount and Comcast, Netflix had access to quick, clean cash. Paramount was in talks with Apollo Global Management and Middle Eastern sovereign wealth funds to raise debt to support its bid.
- Paramount and Comcast did not respond to a request for comment about the deal.
What's next: WBD still plans to spin-off its cable assets, which include networks like CNN and TNT, next year into a separate publicly traded company.
