Netflix has announced a deal to acquire HBO and Warner Bros
After winning the bidding war for Warner Bros. and HBO, Netflix announced a plan that might bring together one of the biggest traditional film and television studios with two of the top three streamers.
At a risky moment for the entertainment industry, if the transaction closes, it will drastically change Hollywood.
However, it will first go through a rigorous regulatory evaluation in the US and other nations.
On Friday morning, Netflix revealed the massive agreement with Warner Bros. Discovery. For $72 billion, including debt, it has agreed to purchase the storied TV and film studio as well as businesses like the HBO Max streaming service.
The announcement jolted Hollywood and jumbled expectations about the next steps for Warner Bros. Discovery, which is also the parent company of CNN.
Warner Bros. Discovery (WBD) said it is moving forward with its plans to split into two publicly traded halves in 2026. Once the split takes effect, Netflix intends to acquire the Warner half. The other half, Discovery Global, will house CNN and other cable channels.
WBD now expects the split to take effect in the summer of 2026.
But this mega-media merger saga is far from over. Paramount and Comcast, the other media giants known to have submitted offers for WBD, may continue to pursue the company.
Unexpected development
For a few weeks, Paramount was believed to be leading the WBD auction. Executives from Paramount, who wish to acquire WBD in its entirety, including its cable assets, oozed confidence on their merger plan and their advantageous partnership with President Trump.
However, many were taken aback by Netflix's audacious bids. According to people familiar with the situation, the streaming behemoth presented two proposals earlier this week that put them ahead of Paramount's offers.
Furthermore, Netflix agreed to the same costly breakup fee that Paramount proposed, one of the sources said. This means the would-be buyer will pay WBD billions of dollars if the deal is not completed.
That’s critical because the biggest X factor is regulatory approval. Paramount’s proposed bid for WBD faced its own uncertain European regulatory environment because of the companies’ combined European assets. But the Paramount CEO David Ellison was largely viewed as the Trump administration’s favored buyer. Now, the administration will review any transaction between Netflix and WBD, and some analysts expect a political and legal battle to ensue.
Concerns regarding the possible consolidation have already been voiced by a few American politicians.
Sen. Mike Lee wrote on X that "learning about Netflix's ambition to buy its real competitive threat – WBD's streaming business – should send alarm to antitrust enforcers around the world." "If this transaction were to go through, it would raise serious questions about competition—possibly more so than any transaction I've seen in about ten years."
However, Netflix officials will contend that the assets are complimentary and that the acquisition will provide "more opportunities for the creative community," as stated in a Friday morning news release.
Greg Peters, the Netflix co-CEO, said Warner Bros. “has helped define entertainment for more than a century,” and “with our global reach and proven business model, we can introduce a broader audience to the worlds they create—giving our members more options, attracting more fans to our best-in-class streaming service, strengthening the entire entertainment industry and creating more value for shareholders.”
Hollywood expresses doubt
That’s the pitch. But many entertainment industry heavyweights have already heaped doubt on it.
Cinema United, a trade association representing movie theater owners, said the deal “poses an unprecedented threat to the global exhibition business,” given Netflix’s general aversion to theatrical releases.
Netflix, anticipating these objections, said Friday that it “expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films.”
A combination of Netflix and HBO would end one of the great media industry rivalries of the past decade. A recent Bank of America analyst report put it this way: “If Netflix acquires Warner Bros., the streaming wars are effectively over. Netflix would become the undisputed global powerhouse of Hollywood beyond even its currently lofty position.”
