Netflix has agreed to buy Warner Bros Discovery’s film and streaming businesses in a major Hollywood deal worth $72bn (£54bn).
The streaming giant emerged as the highest bidder for Warner Bros. ahead of rivals Comcast and Paramount Skydance after a protracted battle.
Warner Bros owns franchises including Harry Potter and Game of Thrones, and the HBO Max streaming service.
The acquisition will lead to a radical reshaping of the US film and media industry, but analysts have warned it could face resistance from competition authorities.
Netflix co-CEO Ted Sarandos said that by combining Warner Bros.’ library of shows and movies with the streaming platform, “we can give audiences more of what they love and help define the next century of storytelling.”
Netflix’s other co-CEO, Greg Peters, said the deal meant Netflix could introduce Warner Bros. products to a broader audience.
The cash-and-stock deal is worth $27.75 per Warner Bros. share, with a total enterprise value — which includes the company’s debts and the value of its stock — of about $82.7 billion.
David Zaslav, chairman and CEO of Warner Bros., said the announcement “combines two of the largest storytelling companies in the world.”
“By joining Netflix, we will ensure that people around the world continue to enjoy the world’s most resonant stories for generations to come,” he said.
Both companies said the deal would allow Netflix to expand the production capacity of its studios and increase its investment in original content.
The sale was unanimously approved by the boards of directors of Netflix and Warner Bros.
In the deal, Netflix will complete the acquisition after Warner Bros finalizes its previously announced plans to separate its streaming and studio division from its global networks division into two publicly traded companies.
Its global networks division includes its cable channels such as CNN, as well as its sports brands and free-to-air channels in Europe.
That separation is expected to be completed between July and September of next year.
Paolo Pescatore, founder and tech media and telecommunications analyst at PP Foresight, said the sale was “a great statement of intent and underlines Netflix’s aspirations to be a global leader in the new streaming world order.”
He added that the “surprising move” made sense for Warner Bros., “but it will be a headache for Netflix.”
“These are uncharted waters and previous large media acquisitions have been poorly executed. If approved, Netflix will need to have a very laser-focused approach to integration and execution,” he said.
Rival Paramount had made an initial offer to buy the entire company, including its cable networks, in October. Warner Bros. rejected this move before going on sale.
Ahead of Friday’s announcement, Emma Wall, chief investment strategist at Hargreaves Lansdown, said the US competition regulator would likely involve whoever won.
“This will create a global megapower in the television entertainment sector that the regulator will want to examine,” he said.
Tom Harrington, head of television at Enders Analysis, said it was difficult to assess whether the deal would win regulatory approval, but if it went through it would have a massive impact on cinema.
“If carried out, it would reorient Hollywood, with a streamer acquiring a business of which it is existentially the antithesis: Netflix has always had limited use for cinema, but overall its offering undermines it,” he said.
Harrington said there were likely to be “major reductions” in television and film production from a merged entity, prompting resistance to the move from parts of Hollywood and relevant unions.
“HBO, the creative gem, would be horribly exposed within Netflix, even though it has survived difficult owners for much of its existence,” he said.
For consumers, Harrington said a merger would likely result in higher costs.
“Netflix would become more expensive, and while HBO Max would close or become non-essential, Netflix’s increased household penetration would likely mean an increase in total subscription revenue.”
