In a sweeping move that could redefine the future of film and television, Netflix’s $72 billion acquisition of Burbank-based Warner Bros. Discovery was announced Friday, a blockbuster deal that would unite the streaming giant with the studio behind “Harry Potter” and “Friends.”
Netflix Inc. and Warner Bros. Discovery Inc. announced in a joint statement Friday that they have entered into a definitive agreement for Netflix to acquire Warner Bros., including its film and television studios and the HBO and HBO Max brands.
Netflix has more than 300 million subscribers worldwide. With HBO Max folded in, that number would jump past 420 million, giving the company a subscriber base unmatched by any other premium streaming service.
“Our mission has always been to entertain the world,” Ted Sarandos, co-CEO of Netflix, 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. Together, we can give audiences more of what they love and help define the next century of storytelling.”
When completed the deal will make Netflix a Hollywood juggernaut bigger than The Walt Disney Co.”
Netflix is offering about $27.75 per Warner Bros. Discovery share in a cash-and-stock deal and will take on more than $10 billion in company debt, putting the transaction’s value at $82.7 billion.
“Friday’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most,” said David Zaslav, pesident and CEO of Warner Bros. Discovery.
“For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention and shaped our culture. By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
Momentum shifted earlier this week after Netflix, Paramount and Comcast delivered binding second-round offers. By Thursday night, following a final deadline for sweetened bids, Netflix had pulled ahead. The boards of both Netflix and Warner then voted unanimously to approve the acquisition.
The companies said the deal is expected to close within 12 to 18 months, following Warner’s planned spinoff of its cable networks. CNN, Discovery and other cable properties are not part of the acquisition.
However, the blockbuster deal is likely to draw pushback from antitrust officials. The company’s long-standing preference for debuting films on its own platform rather than in theaters is expected to be another point of contention.
Cinema United, the world’s largest exhibition trade association, announced its opposition Friday to the proposed deal.
“The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business,” Cinema United President and CEO Michael O’Leary said in a statement. “The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world.”
The theatrical business has been battered in recent years by pandemic shutdowns and, more recently, dual labor strikes that stalled productions and pushed back release calendars. Box office revenue and the number of wide releases remain well below pre-pandemic levels, raising concerns that the industry may never fully recover.
The deal also drew immediate pushback from the Writers Guild of America.
“The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent,” the WGA said in a statement.
“The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers and reduce the volume and diversity of content for all viewers. Industry workers along with the public are already impacted by only a few powerful companies maintaining tight control over what consumers can watch on television, on streaming and in theaters. This merger must be blocked.”
Directors weighed in as well, with the Directors Guild of America warning that consolidation could undermine competition and creative opportunity.
“We believe that a vibrant, competitive industry — one that fosters creativity and encourages genuine competition for talent — is essential to safeguarding the careers and creative rights of Directors and their teams,” the DGA said in a statement. “We will be meeting with Netflix to outline our concerns and better understand their vision for the future of the company.”
Rep. Laura Friedman, D-Glendale, said the deal raises significant concerns for Hollywood workers.
“As the representative of nearly every major producer in Hollywood and a former film producer myself, my priorities are protecting jobs in greater Los Angeles and ensuring a robust and competitive industry that fosters creative expression and delivers to Americans excellent, affordable entertainment and quality news media,” Friedman said in a statement.
“Repeated consolidation in this industry has already cost so many film and television jobs, and any merger should be evaluated on its impacts on competition and employment. Thousands of local jobs and the greater Los Angeles economy depend on it.”
She said she will closely monitor the deal to ensure it benefits Los Angeles workers and pledged to work with labor and industry to protect jobs and support the local economy.
While Netflix keeps most of its original content on its streaming service, it has occasionally stepped into theaters. Recent examples include Oscar-qualifying runs for “Frankenstein,” special sing-along showings of “KPop Demon Hunters” and a planned theatrical rollout for the “Stranger Things” series finale.
On Friday night, Netflix sent an email to its subscribers under the subject line “Welcoming Warner Bros. to Netflix” — saying, “What*s changing?
“Nothing is changing Friday. Both streaming services will continue to operate separately. We have more steps to complete before the deal is closed, including regulatory and shareholder approvals. You’ll hear from us when we have more to share. In the meantime, we hope you’ll continue to enjoy watching as much as you want, whenever you want — all on your current membership plan.”