Netflix to acquire Warner Bros. studio and streaming business

Netflix to Acquire Warner Bros. Discovery in $72 Billion Deal

By WYATTE GRANTHAM-PHILIPS and MATT OTT, AP Business Writers

NEW YORK (AP) — Netflix has announced a deal to purchase Warner Bros. Discovery, the renowned Hollywood giant responsible for iconic franchises like “Harry Potter” and HBO Max, in a blockbuster $72 billion agreement that could revolutionize the entertainment industry.

If approved by regulators, the merger would bring together two of the largest players in television and film, combining Warner’s extensive television and motion picture division, including DC Studios, with Netflix’s vast library and successful original content such as “Stranger Things” and “Squid Game.”

David Zaslav, CEO of Warner Bros. Discovery, expressed excitement about the merger, stating, “By joining forces with Netflix, we will ensure that audiences worldwide continue to enjoy compelling stories for years to come.”

The $72 billion cash and stock deal values Warner at $27.75 per share, with a total enterprise value of $82.7 billion, including debt. The transaction is expected to close within the next 12 to 18 months, following Warner’s planned separation of its cable operations. Not included in the deal are networks like CNN and Discovery.

The potential merger is likely to face significant antitrust scrutiny, particularly regarding its impact on movie production and streaming subscriptions.

Mike Proulx, vice president and research director at Forrester, commented, “Netflix is already a dominant force in streaming, and with HBO Max under its wing, it will solidify its position as the industry leader.”

Will HBO Max and Netflix Remain Separate?

One key question raised by industry experts is whether HBO Max and Netflix will continue as distinct streaming services or merge into a single platform. Regardless, consumers may benefit from potential cost savings through bundled subscriptions, offering relief amidst rising streaming service prices.

Netflix emphasized that the addition of HBO and HBO Max content will enhance its offerings and improve consumer experience.

However, critics have voiced concerns about the impact of a Netflix-Warner alliance on both consumers and industry professionals, citing potential job losses and reduced content diversity.

Notably, Netflix has pledged to maintain theatrical releases for Warner’s studio films, honoring existing contractual obligations.

While Netflix primarily focuses on digital content, it has occasionally ventured into theatrical releases for select projects, such as its awards contenders and special screenings.

Ted Sarandos, co-CEO of Netflix, stated, “Our goal has always been to entertain audiences, and this merger with Warner will allow us to deliver more of what viewers love.”

Critics Voice Concerns Over Movie Theaters and Filmmakers

Critics fear that a Netflix-Warner collaboration could negatively impact movie theaters and the filmmaking community. Industry associations like Cinema United and the Writers Guild of America have expressed reservations about the merger.

Paramount appeared to be a leading contender in the bidding war for Warner, with reports of all-cash offers. However, Netflix ultimately secured the deal, positioning itself as a major player in the entertainment landscape.

Regulatory Challenges Ahead

Despite Netflix’s successful bid, experts anticipate regulatory hurdles in the path of the merger. Political considerations, historical relationships, and antitrust concerns could influence the outcome of the deal.

Christina DePasquale, an antitrust specialist at Johns Hopkins University, highlighted potential government scrutiny over a streaming powerhouse controlling content production and distribution.

Warner Bros. Discovery, established just three and a half years ago, announced plans to separate its streaming and studio operations from its cable business, reflecting the evolving media landscape.

With the acquisition, Netflix gains access to Warner’s prestigious legacy studios, signaling a strategic shift for the streaming giant.

Ott reported from Washington. Associated Press writers Matt Sedensky in New York and Lindsey Bahr in Pittsburgh contributed to this report.