Netflix to buy Warner Bros. in $72 billion cash, stock deal

Under the deal announced Friday, Warner Bros. shareholders will receive… At $27.75 per share in cash and Netflix stock. The total value of the equity of the deal is $72 billion, while the institutional value of the deal is about $82.7 billion.

Prior to the closing of the sale, Warner Bros. will complete the sale. The planned spin-off of its networking division, which includes cable channels such as CNN, TBS and TNT. Netflix said in a statement that this deal is now expected to be completed in the third quarter of 2026.

The acquisition represents a major strategic shift for Netflix, which has never done a deal on this scale. The streaming company has grown into the most valuable company in Hollywood, without the benefit of a library or studio, by licensing programming from others and then expanding into original content.

With your purchase, Netflix becomes the owner of HBO network, along with its library of hit shows such as The soprano and theWhite lotus. Warner Bros. assets include: Also its sprawling studios in Burbank, California, along with a massive film and television archive including Harry Potter and friends.

“Together, we can give audiences more of what they love and help define the next century of storytelling,” Netflix co-CEO Ted Sarandos said in the statement.

Netflix said it expects to keep Warner Bros. existing operations and building on its strengths, including theatrical releases of films, a point that has been a cause for concern in Hollywood. Netflix said the deal will allow it to “significantly expand” US production capacity and invest in original content, which will create jobs and boost the entertainment industry.

However, the combination is also expected to save “at least $2 billion to $3 billion” in costs annually by year three, according to the statement.

Warner Bros. developed herself for that sale In October, after receiving interest from several parties. In addition to Netflix, the company has been pursued by Paramount Skydance Corp Comcast Netflix entered exclusive deal talks with Netflix on Thursday, Bloomberg reports I mentioned.

The bidding became controversial, with Paramount accusing Warner Bros. Running an unfair process on Netflix’s behalf. Netflix agreed to pay Warner Bros. a termination fee. $5.8 billion if the deal collapses or fails to obtain regulatory approval.

The traditional TV business is shrinking as viewers shift to streaming, a world dominated by Netflix. Last quarter, Warner Bros.’ cable television networks division announced… decline 23% in revenue, as customers canceled their subscriptions and advertisers moved elsewhere.

Founded nearly three decades ago as a DVD rental company that sends discs to customers through the mail, Netflix ended 2024 with revenue of $39 billion. Founded in the 1920s, Warner Bros. has generated sales of more than $39 billion.

Warner Bros. Iconic content gives Netflix strong programming to maintain its edge over competitors like Walt Disney Company and Paramount. The deal is certain to face antitrust scrutiny in the US and Europe, and has already raised some red flags.

California Republican Darrell Issa He wrote a note To US regulators who object to any potential Netflix deal, saying it could harm consumers. However, Netflix has argued that one of its biggest competitors is… alphabet a company YouTube.

Netflix’s interest in Warner Bros. Also sending shivers through Hollywood. The company has largely refused to release films in theaters, and has sometimes shown its original films in limited theaters.

Under the terms of the agreement, Warner Bros. shareholders will receive $23.25 in cash and $4.50 in Netflix common stock. The transaction is expected to close within 12 to 18 months.

Moelis & Co is Netflix’s financial advisor. Wells Fargo Acts as an additional financial advisor, along with BNP Paribas and HSBC Holdingsproviding $59 billion in debt financing, according to a regulatory filing.

Allen and company, JPMorgan Chase And partners Evercore They act as financial advisors to Warner Bros. Discovery.