On The Deals Shaping Our Economy
It's done. Netflix and Warner Bros. Discovery (WBD) have entered into a definitive agreement for Netflix to acquire the legendary Warner Bros. film and TV studios, along with HBO and HBO Max.
The Big Picture: This massive transaction unites Netflix’s global streaming dominance with Warner Bros.’ century-long legacy. The deal creates an "extraordinary offering" combining Stranger Things and Squid Game with Harry Potter, Game of Thrones, and the DC Universe.
💰 The Deal Specs
The transaction is valued at $27.75 per WBD share, implying a total enterprise value of $82.7 billion.
The Payout: WBD shareholders will receive $23.25 in cash and $4.501 in Netflix stock per share.
The Collar: The stock component is subject to a collar mechanism based on Netflix's volume-weighted average price (VWAP) prior to closing.
The Timing: The deal is expected to close in 12–18 months.
Synergies: Netflix expects to realize $2-3 billion in annual cost savings by year three.
Of note: The final deal price ($27.75) landed remarkably close to the $28 per share figure insiders had predicted during the exclusive talks.
🔄 The Structure: A Major Split First
Before Netflix takes over the studio, WBD will complete its planned separation.
Discovery Global: WBD’s "Global Networks" division will spin off into a new publicly traded company called Discovery Global.
What it includes: This new entity will hold assets like CNN, TNT Sports, Discovery, and Eurosport.
The Timeline: This separation is expected to complete in Q3 2026, prior to the Netflix closing.
"Our mission has always been to entertain the world... By combining Warner Bros.’ incredible library... with our culture-defining titles... we'll be able to do that even better."
"Today’s announcement combines two of the greatest storytelling companies in the world... We will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come."
Notable assurance: Consistent with leaks during the negotiation phase, Netflix confirmed it expects to maintain Warner Bros.’ current operations, including theatrical releases for films.
🔙 The Backstory: How We Got Here
The road to this deal was competitive and tense.
The Bidding War: As recently as November, Paramount (led by the Ellisons) was viewed as the frontrunner.
The Pivot: Momentum shifted when Netflix put forward the highest offer for the studio business, while offering assurances of operational independence that appealed to CEO David Zaslav.
The Loser: Paramount had stunned rivals by offering a $5bn termination fee to prove their confidence, but ultimately lost out to the streaming giant.
🔮 What to Watch: The Regulatory Fight
While the companies tout this as "strengthening the entertainment industry," the 12-18 month closing window suggests they anticipate a long regulatory review.
Washington is Watching: Antitrust specialists have previously warned that combining two top U.S. streaming platforms would be difficult to approve.
The Trump Factor: Sources previously indicated that President Trump preferred a Paramount merger due to the specific media assets involved (CNN and CBS).
Hollywood Pushback: High-profile talent, including director James Cameron, previously warned that selling to Netflix could trigger a "catastrophic loss of long-term value" for the industry.
Advisors: Moelis & Company, Wells Fargo, and Skadden for Netflix; Allen & Company, J.P. Morgan, Evercore, and Wachtell Lipton for WBD.
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