Netflix It announced on Friday that it had reached an agreement to purchase a portion of it. Warner Bros. Discovery, By quickly ending the dramatic bidding process, paramount skydance and comcast There is also a scramble for legacy assets.
The deal is comprised of cash and stock and is valued at $27.75 per WBD share, the companies said. This gives the transaction an equity value of $72 billion and a total enterprise value of approximately $82.7 billion.
Netflix plans to acquire Warner Bros.’ movie studio and streaming service, HBO Max. Warner Bros. Discovery will move forward with its previously planned spinout of Discovery Global, which includes a large portfolio of pay-TV networks such as TNT and CNN.
The blockbuster deal brings together Netflix, the streaming giant that has transformed the media industry in recent years, and the storied Warner Bros. film studio, known for its library of films including The Wizard of Oz, the Harry Potter series and the DC Comics universe. It also includes HBO Max content such as “The Sopranos” and “Game of Thrones.”
“I think some people are surprised that we’re making this acquisition, and we certainly understand why. For many years, we’ve been known as being a builder, not a buyer,” Netflix co-CEO Ted Sarandos said on an investor conference call Friday morning.
“We already have great shows and movies, we have a great business model, and it’s working for the talent, it’s working for the consumers, it’s working for the shareholders. This is a rare opportunity,” he said. “It helps us fulfill our mission of entertaining the world and bringing people together through great stories.”
The acquisition is expected to close after the separation of the television networks takes place and is currently expected to close in the third quarter of 2026. The companies estimate that the transaction will close in 12 to 18 months.
As part of the transaction, Warner Bros. Discovery stockholders will receive $23.25 in cash and $4.50 in Netflix common stock for each outstanding share of WBD common stock upon closing.
Netflix and Warner Bros. Discovery announced that their respective boards of directors have unanimously approved the transaction, which is subject to regulatory approval and WBD shareholder approval.
Netflix has agreed to pay $5.8 billion in reverse breakup fees if the deal is not approved, according to a filing with the Securities and Exchange Commission. If Warner Bros. Discovery decides to terminate the deal in order to pursue another merger, it will pay a $2.8 billion breakup fee.
Overtake Paramount
Given the scale of both companies’ expansive streaming businesses, a merger could invite regulatory scrutiny. Netflix announced that it would have over 300 million streaming subscribers worldwide by the end of 2024, the last time it released customer numbers. Warner Bros. Discovery announced that it had 128 million subscribers worldwide as of September 30th.
The Wall Street Journal reported that Paramount cited potential antitrust concerns in a letter to Warner Bros. Discovery executives earlier this week as the second round of bidding began.
The newly combined Paramount Skydance premiered on Warner Bros. Discovery in September and received three bids before WBD began the formal sale process. The company, run by David Ellison, was the only suitor to bid for WBD’s entire portfolio, including its movie studio, streaming business and television network.
Paramount’s final bid, accepted Thursday night, was $30 per share, all in cash, people familiar with the matter told CNBC on condition of anonymity to discuss the confidential deal. Paramount’s offer included a $5 billion breakup fee if the deal did not receive regulatory approval after about 10 months, the people said.
Paramount earlier this week claimed Warner Bros. Discovery was favoring Netflix and questioned the “fairness and appropriateness” of the sale process.
“It has become increasingly clear, including through media reports, that WBD appears to have abandoned the appearance and reality of a fair transaction process, thereby abdicating its obligations to its shareholders, and embarking on a short-sighted process that resulted in a predetermined outcome favoring a single bidder,” Paramount lawyers said in a letter to Warner Bros. Discovery management.
—CNBC’s David Faber, Kasey O’Brien and Laya Neelakandan contributed to this report.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. With Comcast’s planned Versant spinoff, Versant will become CNBC’s new parent company.
