Netflix to Acquire Warner Bros. Discovery in $83B Deal

December 5, 2025 at 19:38 UTC

6 min read

Netflix and Warner Bros. Discovery logos with $83B acquisition headline and streaming industry impact

Key Points

Netflix has agreed to acquire Warner Bros. Discovery's film and TV studios, including HBO Max, in a cash-and-stock deal valued at approximately $82.7 billion enterprise value.
The transaction values Warner Bros. Discovery at $27.75 per share, with shareholders receiving $23.25 in cash and $4.50 in Netflix stock per share, subject to a collar on Netflix stock price.
The deal is expected to close in 12 to 18 months, following the planned spin-off of Warner Bros. Discovery's Global Networks division, Discovery Global, which includes cable channels like CNN and TNT.
The acquisition faces significant regulatory scrutiny in the US and Europe, with concerns about market consolidation, antitrust issues, and the future of theatrical film distribution.

Overview of the Acquisition Deal

On December 5, 2025, Netflix announced a definitive agreement to acquire Warner Bros. Discovery's film and television studios along with its streaming service HBO Max and HBO. The deal is valued at an enterprise value of approximately $82.7 billion, which includes an equity value of $72 billion. Warner Bros. Discovery shareholders will receive $23.25 in cash and $4.50 in Netflix common stock for each share they own, subject to a collar based on Netflix's stock price prior to closing. This transaction marks one of the largest media consolidations in recent years, surpassing Disney's $71 billion acquisition of Fox in 2019. The acquisition will bring iconic franchises such as Harry Potter, Game of Thrones, DC Comics, Friends, The Sopranos, and The Big Bang Theory under Netflix's control, significantly expanding its content library and production capabilities.

Strategic Implications for Netflix and Warner Bros. Discovery

This acquisition represents a major strategic shift for Netflix, which historically grew through original content production and licensing rather than large-scale acquisitions. By acquiring Warner Bros. Discovery's studios and streaming assets, Netflix aims to secure long-term rights to high-profile content and reduce its reliance on external studios. The deal is expected to enhance Netflix's studio capabilities, allowing it to expand U.S. production capacity and increase investment in original content over the long term. Netflix executives, including co-CEOs Ted Sarandos and Greg Peters, emphasized that the combined entity will offer audiences more choice and help define the next century of storytelling. The acquisition is also expected to create value for shareholders by attracting and retaining more subscribers, driving engagement, and generating incremental revenue and operating income. Netflix anticipates realizing $2-3 billion in annual cost savings by the third year post-closing and expects the transaction to be accretive to GAAP earnings per share by year two.

Details on Transaction Structure and Timeline

The transaction is structured as a cash-and-stock deal, with Warner Bros. Discovery shareholders receiving a combination of cash and Netflix shares. The stock component is subject to a collar mechanism to mitigate volatility risk, ensuring shareholders receive a value equivalent to $4.50 per share in Netflix stock within a specified price range. The deal excludes Warner Bros. Discovery's Global Networks division, which includes cable channels such as CNN, TNT, and TBS. This division, renamed Discovery Global, is planned to be spun off into a separate publicly traded company, with the separation expected to be completed by the third quarter of 2026. The acquisition is contingent upon the successful completion of this spin-off, regulatory approvals, and customary closing conditions. The companies anticipate closing the deal within 12 to 18 months following the spin-off.

Regulatory and Market Challenges Ahead

The acquisition faces significant regulatory scrutiny in the United States, Europe, and other jurisdictions due to concerns about market consolidation and antitrust implications. Lawmakers and industry stakeholders have expressed apprehension about the potential for Netflix to dominate the streaming market by combining with HBO Max, which currently has nearly 130 million subscribers. There are also concerns about the impact on theatrical film distribution, as Netflix's historical approach to releasing films differs from traditional studios. Netflix has committed to honoring existing theatrical release agreements and maintaining Warner Bros.' current operations, including theatrical releases. However, analysts and theater owners remain cautious, fearing that Netflix might shorten or bypass theatrical windows in the future. Paramount Skydance, a competing bidder that was outpaced by Netflix, has publicly questioned the fairness of the sale process and raised concerns about regulatory approval. Netflix has offered a $5 billion breakup fee to Warner Bros. Discovery in case the deal fails to close due to regulatory rejection, signaling its confidence in overcoming these hurdles.

Competitive Bidding and Industry Reactions

The acquisition followed a competitive bidding process involving Paramount Skydance and Comcast, both of which submitted offers for Warner Bros. Discovery's assets. Paramount initially bid for the entire company, including cable networks, but Netflix focused on acquiring the studios and streaming business. Netflix's offer of approximately $28 per share outbid Paramount's nearly $24 per share proposal. Paramount has challenged the sale process, alleging it was skewed in Netflix's favor. Industry analysts view the deal as transformative, potentially ending the streaming wars by establishing Netflix as the undisputed global powerhouse in entertainment. However, the deal has also sparked debate about the future of competition in Hollywood and the broader entertainment industry. Some industry groups, including cinema owners, have voiced concerns about the potential threat to theatrical exhibition. Political figures have also weighed in, with some senators warning of antitrust issues and the need for thorough regulatory review.

Financial Market Impact and Investor Perspectives

Following the announcement, Netflix's stock price declined by approximately 2-4% amid investor concerns about the scale of the acquisition and the associated debt financing. Netflix is expected to assume significant debt to fund the purchase, including Warner Bros. Discovery's existing net debt of $10.7 billion and an additional $50 billion in new debt. Warner Bros. Discovery's shares rose modestly but remained below the acquisition price, reflecting the time horizon until deal closure and regulatory uncertainties. Analysts have provided mixed views on Netflix's stock outlook post-acquisition, with some projecting upside potential based on the expanded content portfolio and subscriber growth, while others caution about integration risks and market challenges. The deal is expected to be accretive to earnings by the second year, with cost synergies and revenue growth driving financial performance. Netflix plans to leverage the combined content library to attract and retain subscribers globally, enhancing its competitive position against rivals such as Disney and Paramount.

Key Takeaways

Netflix's $82.7 billion acquisition of Warner Bros. Discovery's studios and streaming assets is a landmark deal that will reshape the entertainment industry.
The transaction includes a planned spin-off of Warner Bros. Discovery's cable networks, with the acquisition expected to close in 12 to 18 months pending regulatory approval.
The deal significantly expands Netflix's content library and production capabilities, positioning it as the dominant global streaming service.
Regulatory scrutiny and industry concerns about market consolidation and theatrical distribution remain key challenges to the deal's completion.