Netflix agrees to buy Warner Bros Discovery studio and streaming business
3552 Mins Read
Netflix has agreed to buy Warner Bros Discovery in an $82.7bn (£62bn) deal that will dramatically reshape the established Hollywood film and TV industry.
The streaming company will take control of prize assets including Warner Bros, the studio behind franchises including Harry Potter, Superman and Batman, as well as HBO, home to shows including Game of Thrones, The White Lotus and Succession.
Netflix will also get hold of an extensive TV archive that includes classics such as Friends, which is scheduled to be removed from Netflix at the end of the year, and The Big Bang Theory.
“Our mission has always been to entertain the world,” said Ted Sarandos, the co-chief executive of Netflix. “Together, we can give audiences more of what they love and help define the next century of storytelling.”
The deal, which values WBD at $72bn excluding debt, will close after WBD spins-off its cable channels, which include CNN, TBS and TNT, which is expected to be completed in the third quarter next year.
Netflix, which has offered a $5bn breakup fee if the deal fails to gain regulatory clearance, had been in competition with Paramount Skydance and Comcast, which owns assets including Universal Studios and Sky.
Netflix said it expects to make at least $2bn to $3bn in annual savings by the third year after the deal closes.
Analysts have warned that the deal could spark competition concerns as it would result in the combination of two of the biggest streaming services in the US.
Netflix has given assurances that it will continue to allow the Warner Bros film studio to continue to have wide cinematic releases.
“However, significant concerns remain within the industry and among government officials,” said Alicia Reese, a media and entertainment analyst at Wedbush. “Should the exclusive negotiations with Netflix lead to a proposed sale, the regulatory process would be lengthy and difficult and may ultimately block the sale without clear assurances from the studio side.”
WBD has already negotiated its theatrical release slate through until the end of 2029, so any buyer would at the least have to honour those obligations until they come up for renewal.
“For more than a century Warner Bros has thrilled audiences,” said David Zaslav, the chief executive of WBD. “By coming together with Netflix, we will ensure people everyehere will continue to enjoy the world’s most resonant stories for generations to come.”
Warner Bros formally put itself up for sale in October after receiving interest from several parties.
Earlier this week, James Cameron, the director of Titanic and the Terminator and Avatar series, warned that a sale to Netflix would cause a “catastrophic loss of long-term value” for the entertainment industry.
Paramount, run by David Ellison and bankrolled by his billionaire father and Oracle founder, Larry, had been seen as the early frontrunner.
Paramount, which owns assets including Channel 5 in the UK, had also offered a $5bn termination fee if a deal is agreed but fails to get regulatory clearance.
