In what is arguably the biggest news in entertainment this year, Netflix, Inc. has entered into a definitive agreement with Warner Bros. Discovery, Inc. (WBD) to acquire Warner Bros., including its film and television studios, HBO Max and HBO, for a cash and stock transaction valued at US$27.75 per WBD share and a total enterprise value of approximately US$82.7 billion (equity value of $72 billion). The transaction is expected to close after the previously announced separation of WBD’s Global Networks division, Discovery Global, into a new publicly traded company, which is expected to be completed in Q3 2026.
This means that the Netflix portfolio will now include beloved franchises, shows, and movies like The Big Bang Theory, The Sopranos, Game of Thrones, The Wizard of Oz and the DC Universe. This is added to Netflix’s already extensive portfolio, which includes shows like Wednesday, Money Heist, Bridgerton, Adolescence and Extraction.
“Our mission has always been to entertain the world,” says Ted Sarandos, co-CEO of Netflix. “By combining Warner Bros.’ incredible library of shows and movies, from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends with our culture-defining titles like Stranger Things, KPop Demon Hunters, and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”
“This acquisition will improve our offering and accelerate our business for decades to come,” adds Greg Peters, co-CEO of Netflix. “Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create, giving our members more options, attracting more fans to our best-in-class streaming service, strengthening the entire entertainment industry, and creating more value for shareholders.”
David Zaslav, President and CEO of Warner Bros. Discovery comments: “Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most. For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture. By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
Warner Bros.’ studios is a supplier of television titles and filmed entertainment. HBO and HBO Max adds a complementary offering for consumers via premium and streaming content. Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films. The HBO and HBO Max library runs deep, with titles including everything from The Last of Us to The White Lotus as recent hits. With these titles added to the Netflix library, subscribers will get more value with their subscriptions. But we will likely also expect to see another price hike in the future to accommodate this now more extensive library of titles.
The acquisition also gives Netflix the opportunity to enhance its studio capabilities, expanding U.S. production capacity and grow investment in original content. The streamer expects that this move will help attract more subscribers and retain existing ones. Netflix estimates an at least US$2-3 billion cost savings per year by the third year and expects the transaction to be accretive to GAAP earnings per share by year two.
Under the terms of the agreement, each WBD shareholder will receive US$23.25 in cash and US$4.501 in shares of Netflix common stock for each share of WBD common stock outstanding at the closing of the transaction. The transaction values Warner Bros. Discovery at US$27.75 per share, implying a total equity value of approximately US$72 billion and an enterprise value of approximately US$82.7 billion.
In June 2025, WBD announced plans to separate its Streaming & Studios and Global Networks divisions into two separate publicly traded companies. This separation is now expected to be completed in Q3 2026, prior to the closing of this transaction. The newly separated publicly traded company holding the Global Networks division, Discovery Global, will include premier entertainment, sports and news television brands around the world including CNN, TNT Sports in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report.
The stock component is subject to a collar under which WBD shareholders will receive Netflix stock valued at US$4.50 per share, provided the 15-day volume weighted average price of Netflix stock price (measured three trading days prior to closing) falls between US$97.91 and US$119.67. If the VWAP is below US$97.91, WBD shareholders will receive 0.0460 Netflix shares for each WBD share. If the VWAP is above US$119.67, WBD shareholders will receive 0.0376 Netflix shares for each WBD share.
The transaction was unanimously approved by the Boards of Directors of both Netflix and WBD. In addition to the completion of the separation of Discovery Global (WBD’s Global Networks business), completion of the transaction is subject to required regulatory approvals, approval of WBD shareholders and other customary closing conditions. The transaction is expected to close in 12-18 months.