Netflix has struck a bombshell deal to buy Warner Bros, including its film and television studios HBO and HBO Max, for $82.7 billion. This means that fan-favorite franchises — including Game of Thrones, The Sopranos, Harry Potter and the DC universe — will all join Netflix’s portfolio.
A memo sent to Warner Bros employees and viewed by The Independent stated the deal is subject to several conditions, including the completion of the separation of Discovery Global and Warner Bros Discovery.
“This decision reflects the realities of an industry undergoing generational change – in how stories are financed, produced, distributed and discovered – and recognizes the strong, transformed company we are today,” the memo read in part.
The deal — which includes about $10 billion in debt, with an equity value of $72 billion — is not expected to close before the third quarter of 2026, when the Discovery Global separation is set to be completed. It’s not yet clear what changes will affect customers when the deal closes.
In the end, Netflix sealed the blockbuster deal by offering $27.75 per share, which will see each WBD shareholder receive $23.25 in cash and $4.50 in shares of Netflix common stock. On top of that, Netflix is offering a $5.8 billion reverse breakup fee if government regulators do not approve the deal, which topped the $5 billion that David Ellison’s Paramount Skydance had offered in its latest bid.
“Our mission has always been to entertain the world,” co-CEO of Netflix Ted Sarandos said in a statement.
“By combining Warner Bros’ incredible library of shows and movies — from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends — with our culture-defining titles like Stranger Things, KPop Demon Hunters and Squid Game, we'll be able to do that even better,” he continued. “Together, we can give audiences more of what they love and help define the next century of storytelling.”
Warner Bros Discovery CEO David Zaslav, who sent a memo to WBD staffers Friday morning explaining details of the deal, declared the merger “combines two of the greatest storytelling companies in the world” to bring more options to consumers.
“For more than a century, Warner Bros has thrilled audiences, captured the world’s attention, and shaped our culture,” he added. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
While Paramount was proposing to acquire all of Warner Bros Discovery’s assets as part of its bid, the Netflix deal will allow WBD to proceed with the announced separation of its Streaming & Studios and Global Networks divisions into two separate companies. Discovery Global, which will separate from Warner Bros in late 2026 and prior to the completion of the Netflix deal, includes the cable television brands CNN, TNT Sports, Discovery and TBS, a number of free-to-air channels in Europe, as well as digital and streaming products such as Discovery+ and Bleacher Report.
The acquisition comes after a bitter bidding war that pitted WBD against Paramount and Comcast, the home of NBCUniversal.
Lawyers for Paramount sent a blistering letter to Zaslav this week, complaining about the sale process, claiming that it had become “tilted and unfair” after Warner Bros requested second-round bids from suitors looking to acquire some or all of the company’s assets. Besides Paramount and Netflix, Comcast – the corporation that owns NBCUniversal – has also expressed interest in merging with Warner Bros.
“It has become increasingly clear, through media reporting and otherwise, that WBD appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders, and embarked on a myopic process with a predetermined outcome that favors a single bidder,” the letter from attorneys at Quinn Emanuel states, which CNBC published in full.
“We specifically request and expect this letter will be shared and discussed with the full board of directors of WBD.”
The note to Zaslav and the WBD board of directors comes on the heels of a Reuters report that Netflix’s proposed purchase of WBD’s studios and streaming unit would likely reduce streaming costs for consumers by bundling Netflix’s app with HBO Max.
“In recent talks with Warner Bros Discovery, Netflix said the potential combination of its streaming service with HBO Max would benefit consumers by lowering the cost of a bundled offering,” Reuters noted, adding that the vast majority of Netflix users also subscribe to WBD’s streaming service.
Backed by his ultra-wealthy father Larry Ellison, the founder of Oracle and a close ally of President Donald Trump, David Ellison had been desperately attempting to add Warner Bros Discovery to his burgeoning media empire in recent months. Following the Trump administration’s approval of Skydance’s $8.4 billion merger with Paramount, which came on the heels of a politically fraught process that saw Paramount pay Trump $16 million to settle his “meritless” 60 Minutes lawsuit, Ellison began an aggressive campaign to take over WBD.
Ellison, who felt he had a “Trump card” in his takeover pursuit of Warner Bros, was rebuffed at every turn. After the WBD board roundly rejected Paramount’s first three offers, Zaslaz essentially hung a “for sale” sign on the company and opened up the bidding to other suitors. Still, throughout the process, Ellison exuded confidence that he would ultimately succeed in convincing the board to approve a merger between the two media giants — largely because he argued that only Paramount’s bid would be approved by the Trump administration.
“Other potential acquirers of WBD — today or in the future — would need to overcome significant (perhaps insurmountable) hurdles given their dominant market positions,” Ellison wrote to the board in October.
Trump, who has repeatedly gushed over Ellison and praised him as a “great man” since the Paramount-Skydance merger, has applauded the changes Ellison has made to CBS News in recent months. This includes hiring anti-woke opinion writer Bari Weiss as CBS News’ editor-in-chief, installing a former Trump appointee and right-wing think tank leader as the news network’s ombudsman, and eliminating the company's diversity hiring policies. The prospect of Ellison reshaping CNN — which Trump has long despised and deemed “fake news” — in the same vein as CBS News obviously appealed to the media-bashing president.
Despite the belief that he had the inside edge due to a favorable regulatory path enabled by his family’s friendship with the president, Ellison began lashing out this week when it became obvious that Netflix had jumped into the lead after Warner Bros Discovery asked suitors to submit a second round of bids. Amid reports that Zaslav and the board were leaning towards Netflix, Paramount fumed that the sale process had become tainted.
“Several U.S. media outlets have reported on the enthusiasm by WBD management for a transaction with Netflix, and on statements by management that a transaction between WBD and Netflix would be a ‘slam dunk,’ while also referring to Paramount’s bid in a negative light,” Paramount’s memo to Warner Bros stated this week. “Additional reporting since the submission of revised bids on December 1 has indicated that WBD’s ‘board has really warmed to’ a transaction with Netflix due to the ‘chemistry between’ WBD management and Netflix management.”
Ahead of the Netflix-WBD deal announcement, Status News noted Thursday evening that a failed deal this past summer between WBD and Paramount over a South Park licensing agreement “helped poison the well between David Zaslav and David Ellison,” and this tension was an undercurrent running through the Warner Bros auction.
Meanwhile, the New York Post reported earlier this week that Ellison had a “Plan B” in place in case he fell short — and it involved invoking his relationship with the president.
“But if the board chooses Netflix, the Ellisons are developing a game plan that involves going over the head of the board and directly telling Warner’s shareholders, similar to a hostile bid for the company, according to people with direct knowledge of the matter,” the Post wrote. “Their pitch: the Netflix deal is doomed to fail, facing rejection by President Trump’s antitrust cops at the Department of Justice and, if litigated, a loss in federal courts.”
Even before the Netflix deal was announced on Friday morning, MAGA lawmakers were expressing their concern about the merger and suggesting that the purchase wouldn’t clear regulatory hurdles.
“Learning about Netflix’s ambition to buy its real competitive threat — WBD's streaming business — should send alarm to antitrust enforcers around the world,” Sen. Mike Lee (R-UT) tweeted Wednesday night. “This potential transaction, if it were to materialize, would raise serious competition questions — perhaps more so than any transaction I’ve seen in about a decade.”
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