Netflix to acquire Warner Bros. in $72 billion deal

Netflix (NFLX) will acquire Warner Bros. (WBD) in a $72 billion deal, bringing together Hollywood’s most storied studio and the world’s largest streaming platform in one of the biggest entertainment deals in history.

The companies announced Friday they’ve entered into a definitive agreement that will give Netflix control of Warner Bros.’ film and TV studios, as well as HBO and HBO Max, following the planned separation of WBD’s Global Networks division into its own publicly traded company next year.

The deal values WBD at $27.75 per share. Shares of Netflix dropped 2% on the news while WBD gained 2% in early, premarket trading.

Once completed, the acquisition will combine Warner Bros.’ century-long library and hit franchises — like “Harry Potter,” “DC,” “The Sopranos,” “Game of Thrones,” “Friends,” “The Big Bang Theory,” and “Casablanca” — with Netflix originals including “Stranger Things,” “Wednesday,” “Bridgerton,” and “Squid Game.”

Netflix said it intends to maintain Warner Bros.’ current operations, including theatrical film releases.

The move is notable because Netflix has historically been a builder, not a buyer. The streamer has never executed a major acquisition and has leaned heavily into developing its own IP.

As of Q3, 63% of Netflix’s content assets were originals, and no single title represents more than 1% of total viewing, JPMorgan analyst Doug Anmuth highlighted in a recent note. It’s a level of diversification that cushions Netflix from consolidation elsewhere in the industry.

But the landscape is changing. With three subscale streamers — Max, Paramount+, and Peacock — fighting for relevance, analysts say the only path to survival is scale, and Netflix may be seizing the chance to prevent a rival from gaining Warner Bros.’ intellectual property.

“Our mission has always been to entertain the world,” Netflix co-CEO Ted Sarandos said in a press release. “Together, we can give audiences more of what they love and help define the next century of storytelling.”

In the months leading up to Friday’s announcement, Paramount (PSKY), Netflix, and Comcast (CMCSA) all submitted bids for WBD assets. Paramount even challenged the fairness of WBD’s process in a letter reviewed by CNBC earlier this week, an unusual public escalation that underscored how critical this deal was for the company’s future.

Citi’s Jason Bazinet warned that Paramount was “half-pregnant” in streaming and needed WBD more than any other bidder to reach scale. He gave Paramount 60% odds earlier this week.

But Netflix held the clearest advantage in one crucial area: cash.