Netflix agrees to acquire Warner Bros Discovery for $82.7 billion

The Warner Bros Studios logo is seen on a building along Hollywood Blvd. in Los Angeles, California on May 28, 2007. (Photo: Flickr user abgpt)

Key Points

Netflix has agreed to buy WBD’s studio, streaming platforms and IP for nearly $83 billion, contingent on WBD spinning off its cable networks by Q3 2026.
Paramount is challenging the process, arguing WBD favored Netflix and saying its own all-cash bid would face fewer regulatory hurdles.
The deal is expected to undergo intense antitrust scrutiny amid concerns from theater groups that Netflix could shrink the volume and exclusivity of theatrical releases.

Streaming juggernaut Netflix rarely makes an acquisition — but, when it does, it likes to go big before it goes home.

On Friday, Netflix emerged as the winner of a heated three-way competition for Warner Bros Discovery (WBD), agreeing to pay nearly $83 billion for its studio business, streaming platforms and intellectual property.

The deal is contingent upon WBD moving forward with a plan to spin out its cable networks business, which separates channels like CNN, Cartoon Network, Animal Planet, Discovery Channel, Eurosport and DMAX from the transaction.

WBD said the cable spin-out, which was planned months before the acquisition was announced, is expected to be finalized during the third quarter (Q3) of 2026. Once the divorce is complete, the remnants of WBD will marry into Netflix as part of the cash-stock transaction.

“Our mission has always been to entertain the world,” Ted Sarandos, the co-CEO of Netflix, said in a prepared statement on Friday. “By combining Warner Bros’ incredible library of shows and movies — from timeless classics like Casablancaand Citizen Kaneto 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.”

“This acquisition will improve our offering and accelerate our business for decades to come,” Greg Peters, the other co-CEO of Netflix, said on Friday. “Warner Bros has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create — giving our members more options, attracting more fans to our best-in-class streaming service, strengthening the entire entertainment industry and creating more value for shareholders.”

The deal values WBD’s stock at $27.75 per share, slightly higher than bids made by Paramount Global over the past several weeks. Paramount’s unsolicited pursuit of WBD was initially rejected, but the company’s board decided to open up a formal process to weigh offers from all interested parties.

At one point, Amazon, Apple and Comcast were said to be interested in WBD, mainly for its intellectual property, as was the case with Netflix. Only Paramount seemed interested in keeping the company intact.

The deal between WBD and Netflix will almost certainly be the target of antitrust review by the Trump administration and its U.S. Department of Justice (DOJ), which reviewed a similar, large-scale transaction with AT&T when WBD was known as Time Warner.

In this instance, political ideologies will likely weigh heavier on whether to approve or reject the deal, and both Netflix and WBD will likely have to make deep concessions — to the DOJ and to Trump himself — before the deal is approved.

Paramount is expected to lean into that part of the matter by complaining directly to WBD’s shareholders, according to a report from CNBC. Attorneys for Paramount sent a letter to WBD accusing the company of rigging the bid process so that it favored Netflix. The complaint was largely based on media reports that cited unnamed sources.

“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 said.

While Netflix’s offer involved a combination of cash and stock, Paramount’s offer — which was lower in valuation — was all cash, CNBC said. All three companies submitted secondary bids that were higher in overall value than their initial ones made in November.

Paramount believes shareholders are more likely to find its offer more-attractive, since the company has already found favor with the Trump administration through concessions made while merging with Skydance Media earlier this year. Some financial analysts say Paramount is likely to have an easier time getting regulatory approval to buy WBD than Netflix will, even though Paramount’s pursuit is for a larger amount of assets.

WBD had initially expected to announce a decision on the bidding process — whether to pursue a merger, or move forward with splitting up the company on its own — by the end of December.

Stock Price

Paramount is not the only group aggrieved by Netflix’s apparent victory: Movie theater groups are, too. Some believe Netflix will eventually wind down WBD’s practice of screening new movies in theaters in favor of distributing new titles on their own streaming app instead.

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” Michael O’Leary, the president of a group called Cinema United, said in a statement distributed to reporters on Friday. “Regulators must look closely at the specifics of this proposed transaction and understand the negative impact it will have on consumers, exhibition and the entertainment industry.”

Cinema United argued that, if Netflix acquires WBD, it would risk removing nearly one-quarter of all films that are released in movie theaters annually. Netflix distributes some of its own movies in theaters, but they have shorter box office runs compared to films released by legacy studios. In some cases, Netflix opts to release content in theaters weeks or months after the same titles are available on its app.

“Netflix success is television, not movies on the big screen,” O’Leary continued. “A true commitment to theatrical means a robust slate of movies with a meaningful period of theatrical exclusivity supported by marketing. Sporadic and truncated theatrical releases to meet awards criteria in a handful of theaters is not a commitment to exhibition.”

While Netflix and WBD have positioned the merger as good for the content creation business, it is also good for their streaming businesses. Both companies have seen meddling growth in North America, the most-mature market for subscription purchases and connected TV advertising, according to financial earnings reports reviewed by The Desk.

Stock Price

Netflix’s peak has flown under the radar, with most reporters and analysts choosing to focus largely on its global subscriber count. Until recently, the company broke out its subscriber growth and average revenue per user (ARPU), with the company peaking at nearly 90 million paid customers in the U.S. and Canada by the end of 2024 — the last full year that subscriber data was available — around 10 million more paying subscribers than it had one year earlier.

During the same period, Netflix saw larger growth in Europe, the Middle East, Africa and Asia, with nearly 24 million new subscribers between 2023 and 2024, according to its financial statements. But its ARPU was significantly lower in those countries, on account of a less-mature subscription and advertising market and stronger competition from public service broadcasters and domestic cable TV networks — some of which WBD currently owns. In the U.S., ARPU at the end of 2024 was $17.20; in Europe, it was $10.96 and in the Asia-Pacific region, ARPU was just $7.29.

Netflix stopped reporting subscriber counts at the beginning of this year, opting to focus on platform engagement and linking its subscriber and advertising revenue growth to that metric. In doing so, Netflix aggrieved some Wall Street analysts, including Needham & Company’s Laura Martin, who said the decision to pull subscriber data make her wonder about the company’s performance and long-term growth opportunities.

“The less data you have, the less somebody can defend you,” Martin said in response to a question from this reporter at Parks Associates’ Future of Video conference in November. “When you tell me X, but you don’t do X, I take down your shares because there’s something going on that you don’t like me to know about or that makes me skeptical.”

Two years ago, Martin made the case that WBD should buy Paramount,saying Paramount was too small of a player to exist on its own. The comment was made before Paramount merged with Skydance, and months before it was apparent the transaction would work the other way around.

“Paramount is just way too small — it just keeps getting smaller, and it needs to go away, because it is a fabulous asset,” Martin said. “It needs to be part of a bigger bundle of offerings, and Warner Bros Discovery can give it that.”

Martin said a transaction between major media companies — including a hypothetical one she offered where Apple acquired Disney — would face less regulatory scrutiny with a Republican in the White House.