Netflix beat off competition for Warner Bros. Discovery (WBD) by announcing a deal to acquire its studio and streaming business, a deal that, if completed, would unite the streaming giant with one of the most storied film and television studios and such iconic assets as HBO and HBO Max.
The announcement was reported as a watershed for the industry at a particularly sensitive time for Hollywood, where business models continue to be rearranged.
According to the information released, Netflix agreed to buy WBD’s TV and film divisions (studios) and streaming business for US$72 billion, in a deal described as historic and subject to regulatory approval.
Different reports also explain that, when considering the debt, the operation amounts to an enterprise value of around $82.7 billion.
The announced structure implies that not all of WBD would go to Netflix. Cable channels – including CNN, Discovery and other linear assets – would be left out of the package that Netflix buys and would be concentrated in another separate company.
Netflix’s decision that has Hollywood trembling
WBD, on the other hand, maintains its plan to split into two companies. According to reports, the split will give rise to an entity focused on Streaming & Studios (the part that Netflix intends to acquire) and another called Discovery Global/Global Networks, where CNN and other cable channels would remain. WBD has indicated that this spin-off would take effect around 2026 (with expectations placed in the summer or second half of that year, according to reports).
The process attracted other major players. Reports indicate that Paramount (Skydance) and Comcast were among those who submitted bids, and that Netflix ended up prevailing with a proposal that outperformed the others.
One of the key factors in this type of megadeals is regulatory approval. In that context, it has been reported that the deal contemplates a million-dollar breakup clause: around US$5.8 billion if Netflix pulls out.
The operation has already raised concerns about possible antitrust issues, precisely because of the consolidation of two streaming heavyweights (Netflix and HBO Max). Several voices, both for and against, anticipate an intense review in the United States and also outside the country.
Netflix, on the other hand, has defended the logic of the agreement as an expansion of catalog and global reach, and as a way to generate more possibilities within the creative ecosystem.
Along those lines, co-CEO Greg Peters noted that Warner Bros. helped define entertainment for more than a century and that, with Netflix’s global reach and model, they could bring those “worlds” to a wider audience, offering more choice to their members and generating value.
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