TLDR
- Netflix will acquire Warner Bros. from Warner Bros. Discovery for $82.7 billion in total enterprise value ($72 billion equity value) in a cash and stock deal valued at $27.75 per WBD share.
- The transaction will close after WBD separates its Global Networks division (Discovery Global) into a separate public company, expected in Q3 2026, with the full deal closing in 12-18 months.
- Netflix will gain Warner Bros.’ studios, HBO, HBO Max, and iconic franchises including DC Universe, Harry Potter, Friends, Game of Thrones, and The Sopranos.
- Netflix stock dropped 4% on Friday following the announcement, while Warner Bros. Discovery shares rose up to 4%, as Wall Street remains skeptical about the massive spending.
- Netflix expects $2-3 billion in annual cost savings by year three and plans to maintain Warner Bros.’ theatrical release operations despite past criticism of the theater model.
Netflix stock fell 4% on Friday after announcing a deal to acquire Warner Bros. from Warner Bros. Discovery in an $82.7 billion transaction. The decline extended a recent string of losses for the streaming giant. Shares remain up 11% year-to-date despite the volatility.
The deal values Warner Bros. Discovery at $27.75 per share. WBD shareholders will receive $23.25 in cash and $4.50 in Netflix stock for each share they own. The total equity value reaches approximately $72 billion.
Netflix beat out Paramount Skydance and Comcast in what became a competitive bidding war. The streaming company offered nearly $28 per share to secure the deal. Warner Bros. Discovery stock rose as much as 4% on the news.
The acquisition brings together Netflix’s global streaming platform with Warner Bros.’ century-old entertainment legacy. Netflix will gain access to franchises including the DC Universe, Harry Potter, Friends, Game of Thrones, and The Sopranos. These properties will join Netflix’s existing hits like Stranger Things, Squid Game, Wednesday, and Bridgerton.
Ted Sarandos, Netflix co-CEO, said the combination allows the company to give audiences more of what they love. Greg Peters, Netflix co-CEO, stated the deal will accelerate the business for decades. He highlighted Warner Bros.’ production capabilities and creative executives.
David Zaslav, President and CEO of Warner Bros. Discovery, called the combination of two major storytelling companies a way to bring entertainment to more people. The deal received unanimous approval from both boards of directors.
What Wall Street Thinks
Investors appear lukewarm on the massive acquisition despite its potential to expand Netflix’s content library. As rumors heated up in recent weeks, Netflix stock tumbled. Wall Street has grown increasingly skeptical of large capital expenditures.
The $72 billion price tag represents money Netflix could spend on original content or technology improvements instead. Regulatory hurdles also loom large. Netflix must prove the deal maintains competition in streaming.
Morgan Stanley analyst Ben Swinburne wrote last month that Netflix had the smallest opportunity for cost savings from a potential deal. He also noted the company faces perhaps the toughest regulatory path. MoffettNathanson analyst Robert Fishman predicted Netflix wouldn’t get swept up in a bidding war.
Theater Operations Create Questions
Netflix plans to maintain Warner Bros.’ theatrical release operations. This marks a shift for the streaming company. Co-CEO Ted Sarandos said earlier this year that regularly putting films in theaters is an “outdated” model.
Netflix has occasionally released hits like “K-pop Demon Hunters” on big screens. The pivot may concern investors worried about distraction from core streaming operations. Bloomberg reported last month that the deal would require Netflix to change its approach to theaters.
The transaction depends on several conditions being met. Warner Bros. Discovery announced plans in June 2025 to separate its Streaming & Studios and Global Networks divisions. The separation is now expected to complete in Q3 2026.
The newly separated company, Discovery Global, will include CNN, TNT Sports, Discovery channels across Europe, and digital products like Discovery+ and Bleacher Report. The Netflix deal will close after this separation is complete.
Netflix expects to realize at least $2-3 billion in annual cost savings by the third year. The company anticipates the transaction will boost GAAP earnings per share by year two. Netflix plans to expand U.S. production capacity and increase investment in original content.
The stock component includes a collar mechanism. WBD shareholders will receive Netflix stock valued at $4.50 per share if the 15-day volume weighted average price falls between $97.91 and $119.67. Outside that range, the number of shares adjusts accordingly.
The deal requires regulatory approvals, WBD shareholder approval, and other standard closing conditions. Moelis & Company and Skadden Arps serve as Netflix’s advisors. Wells Fargo, BNP, and HSBC are providing committed debt financing. Allen & Company, J.P. Morgan, and Evercore advise Warner Bros. Discovery.
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