Netflix announced Friday it's reached a deal to buy pieces of Warner Bros. Discovery, bringing a swift end to a dramatic bidding process that saw Paramount Skydance and Comcast also vying for the legacy assets.
The transaction is comprised of cash and stock and is valued at $27.75 per WBD sharethe companies said. That puts the equity value of the deal at $72 billionwith a total enterprise value of approximately $82.7 billion.
Netflix will acquire Warner Bros.' film studio and streaming serviceHBO Max. Warner Bros. Discovery will move forward with its previously planned spinout of Discovery Globalwhich includes its massive portfolio of pay TV networkssuch as TNT and CNN.
The blockbuster deal brings together the streaming giant Netflixwhich has upended the media industry in recent yearsand the storied Warner Bros. film studioknown for its library including "The Wizard of Oz," the Harry Potter franchise and the DC comics universe. It will also include the content of HBO Maxincluding "The Sopranos" and "Game of Thrones."
"I know some of you're surprised that we're making this acquisitionand I certainly understand why. Over the yearswe have been known to be buildersnot buyers," Netflix co-CEO Ted Sarandos said on an investor call Friday morning.
"We already have incredible shows and movies and a great business modeland it's working for talentit's working for consumers and it's working for shareholders. This is a rare opportunity," he said. "It's going to help us achieve our mission to entertain the world and to bring people together through great stories."
Netflix's initial bid for WBD's studio and streaming assets was for $27 a shareaccording to a person familiar with the matter. That trumped Paramount's offer at the time and turned the trajectory of the sales talks in Netflix's directionsaid the personwho asked not to be named because the discussions were private.
The acquisition is expected to close after the TV networks separation takes placenow expected in the third quarter of 2026. The companies estimated the transaction would close in 12 to 18 months.
CNBC has reached out to Comcast and Paramount for comment.
As part of the dealevery Warner Bros. Discovery shareholder will receive $23.25 in cash and $4.50 in shares of Netflix common stock for each share of WBD common stock outstanding following the close of the deal.
Netflix and Warner Bros. Discovery said each of their boards of directors unanimously approved the dealwhich is subject to regulatory approval as well as approval of WBD shareholders.
Netflix has agreed to pay a $5.8 billion reverse break-up fee if the deal is not approvedaccording to a Securities and Exchange Commission filing. Warner Bros. Discovery would pay a $2.8 billion breakup fee if it decides to call off the deal to pursue a different merger.
Edging out Paramount
The merger could invite regulatory scrutiny given the size of the expansive streaming businesses for each company. Netflix said it surpassed 300 million global streaming subscribers at the end of 2024the last time it publicly reported its customer count. Warner Bros. Discovery said it had 128 million global subscribers as of Sept. 30.
Paramount raised the potential for antitrust concerns earlier this week in a letter to Warner Bros. Discovery management as second-round bids came inThe Wall Street Journal reported.
The newly merged Paramount Skydance made its initial run at Warner Bros. Discovery in Septembersubmitting three bids before WBD launched a formal sale process. The David Ellison-run company was the only suitor bidding for the entirety of WBD's portfolio — the film studiostreaming business and TV networks.
Paramount's final bidreceived Thursday eveningwas for $30 per shareall cashpeople close to the matter told CNBCspeaking on the condition of anonymity about confidential dealings. Paramount's offer included a $5 billion breakup fee if the transaction didn't win regulatory approval after roughly 10 monthsthe people said.
Earlier this weekParamount raised questions about the "fairness and adequacy" of the sale processcontending Warner Bros. Discovery favored Netflix.
"It has become increasingly clearthrough media reporting and otherwisethat WBD appears to have abandoned the semblance and reality of a fair transaction processthereby abdicating its duties to stockholdersand embarked on a myopic process with a predetermined outcome that favors a single bidder," Paramount attorneys said in a letter to Warner Bros. Discovery management.
— CNBC's David FaberKasey O'Brien and Laya Neelakandan contributed to this report.
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