Netflix has proposed the acquisition of the studio and streaming operations of Warner Bros. Discovery for approximately $72 billion. This potential transaction, valued at a total enterprise value of $82.7 billion or $27.75 per Warner share, aims to integrate significant entities within the film and television sectors. The deal is expected to undergo extensive regulatory and shareholder review, with completion projected within 12 to 18 months, contingent on Warner Bros. Discovery's planned separation of its cable operations.
Proposed Acquisition Details
The proposed acquisition by Netflix, identified as the largest global streaming subscription service, encompasses Warner Bros.' television and motion picture divisions, HBO Max, and DC Studios. Key intellectual properties and content included in the deal are reported to be Looney Tunes, Harry Potter, Friends, and HBO series such as Succession, Sex and the City, and Game of Thrones, along with TNT Sports operations outside the United States.
Assets explicitly excluded from this acquisition include Warner Bros. Discovery's cable networks like CNN, Discovery, TNT Sports within the United States, Eurosport, and Discovery+. These non-included business units are slated to be spun off into a new publicly-traded company, "Discovery Global," by the third quarter of 2026.
Netflix's bid follows Warner Bros. Discovery's outlined plans in June to separate its streaming and studio operations from its cable business. The proposed acquisition also occurs amidst a multi-month bidding process for Warner Bros. Discovery, which reportedly involved interest from other entities. Paramount Skydance, led by David Ellison, has reportedly made a separate $108 billion takeover bid for the entire Warner Bros. Discovery business.
Regulatory and Industry Review
The proposed merger is expected to undergo significant antitrust review by competition regulators in the United States and Europe. Lawmakers in Washington have expressed concerns regarding the potential effects on consumer choice and pricing. Netflix has communicated confidence in obtaining approval, noting a $5.8 billion payment obligation to Warner Bros. Discovery if the deal does not proceed.
The regulatory assessment is anticipated to largely depend on the definition of the competitive landscape within the entertainment sector. A narrow definition focusing solely on video streaming could raise antitrust concerns due to Netflix's expanded market share. Conversely, a broader definition encompassing cable, broadcast television, and platforms like YouTube could mitigate perceived concentration issues. A professor of law indicated that mergers of this nature typically undergo rigorous scrutiny, often leading to conditions that benefit consumers.
A House Judiciary Committee hearing discussed streaming competition and potential merger impacts. Observers have noted that the current administration's utilization of merger reviews has been perceived by some as an attempt to gain editorial concessions from media companies. In a related context, during Paramount's pursuit of Federal Communications Commission (FCC) approval for a separate merger, an FCC Commissioner described the appointment of a "bias" monitor at a news organization by the acquiring corporation as an "unprecedented form of government control over newsroom decisions."
Following the announcement of Netflix's bid, Warner Bros. Discovery shares increased by nearly 2% after U.S. markets opened, while Netflix shares declined by nearly 2%. Shares of Paramount, an entity involved in a competing bid, fell by nearly 6%.
Potential Impact on Consumers and Content
The acquisition is projected to add HBO's 128 million subscribers to Netflix's current base of over 300 million. Netflix has stated that the integration of HBO and HBO Max programming would offer its members a wider selection of titles and optimize consumer plans. Co-chief executives have noted the strength of the HBO brand, providing various integration options.
The specific impact on subscription pricing and content packaging for consumers has not been finalized. Market analysis suggests that increased market dominance could allow for price adjustments, while the consolidation of services might also lead to reduced total spending for subscribers currently paying for multiple platforms. Concerns have been raised regarding potential reductions in content variety and fewer choices for consumers in the long term due to industry consolidation.
Regarding theatrical distribution, Netflix has committed to continuing theatrical releases for Warner's studio films, honoring existing contractual agreements, representing a shift from its historical approach of primarily keeping original content on its online platform. However, a Netflix co-CEO had previously expressed a view that movie-going constituted an "outdated concept."
Concerns have also been raised about potential pressures on content. Netflix's CEO previously defended the removal of a satirical news show critical of a foreign government in 2019, stating the company's focus was on entertainment rather than "truth to power." Entertainment content can influence public understanding, and the removal or restriction of politically sensitive content, including satire, documentaries, and historical dramas, may impact public discourse.
Broader Context of Media Consolidation
The proposed deal aligns with an ongoing industry shift toward streaming platforms and represents a period of increased media consolidation, which has coincided with reported job reductions and decreasing production volumes in some areas. Netflix's operational model, which primarily produces content for its own platform behind a paywall and utilizes algorithms for content visibility, differs from traditional studios that historically licensed content to competitors. A Warner Bros. Discovery deal involving Netflix could grant it control over HBO's programming and the Warner Bros. film library, integrating them into its platform and potentially creating a large entertainment company.
Concerns have been raised regarding the potential concentration of power over media content resulting from such deals. Observers have cited a historical precedent in the 1948 U.S. Supreme Court case United States v. Paramount Pictures, which mandated Hollywood studios divest their theater chains due to concerns about concentrated power over culture and speech from controlling both production and distribution. Calls have been made for regulatory agencies, including the FCC and the Department of Justice, to reject deals deemed to threaten public interest or violate antitrust law.