Netflix has agreed to acquire the film and streaming operations of Warner Bros Discovery for $72bn (£54bn), in one of the biggest deals in Hollywood history.
The streaming giant beat rival bidders including Comcast and Paramount Skydance after a prolonged takeover battle. The deal brings with it some of the most valuable entertainment franchises in the world, including ‘Harry Potter’, 'Game of Thrones’ and the HBO Max streaming service.
The takeover is expected to dramatically reshape the US film and media industry, though analysts have warned the transaction is likely to face close scrutiny from competition regulators.
Netflix co-chief executive Ted Sarandos described the acquisition as a defining moment for the company.
“By combining the Warner Bros library of films such as 'Casablanca’ with Netflix series such as ‘Friends’, we can give audiences more of what they love and help define the next century of storytelling,” he said.
Calling it a “big day” for both companies, Mr Sarandos acknowledged the deal may have surprised some investors but said it was a “rare opportunity” to secure Netflix’s long-term future.
Warner Bros chief executive David Zaslav said the merger would unite “two of the greatest storytelling companies in the world”.
“By coming together with Netflix, we will ensure people everywhere continue to enjoy the world’s most resonant stories for generations to come,” he added.
The cash-and-stock deal values Warner Bros shares at $27.75 each. The total enterprise value of the transaction, including debt, is estimated at $82.7bn.
The acquisition has been unanimously approved by the boards of both companies. Netflix expects the deal to significantly expand its studio production capacity and boost its investment in original content.
However, completion of the takeover is conditional on Warner Bros finalising its plan to separate its streaming and studios business from its global networks division next year. The networks arm includes cable channels such as CNN, sports brands and free-to-air European broadcasters.
Regulatory and industry concerns
Paolo Pescatore of PP Foresight described the sale as “a huge statement of intent” that underlines Netflix’s ambition to dominate global streaming. However, he warned the scale of the deal could create major integration challenges.
“This is a surprising move,” he said. “It makes sense for Warner Bros, but combining two businesses of this size will not be easy for Netflix.”
Warner Bros had previously rejected a proposal from Paramount to buy the entire company, including its cable networks, before putting itself up for sale. Photo by ?LiAnG?, Wikimedia commons.