Netflix Warner Bros acquisition: $72B equity, $82.7B enterprise deal

The streaming leader will buy Warner Bros.’ film studios and HBO Max in a cash-and-stock transaction valuing WBD at $27.75 per share; the deal targets $2–3B annual savings and closes after Discovery Global’s separation.

Executive summary

The Netflix Warner Bros acquisition formalizes a cash-and-stock agreement for the film and streaming assets of Warner Bros. Discovery. The deal values WBD at $27.75 per share, implying roughly $72.0 billion in equity value and $82.7 billion in enterprise value. Netflix will pay $23.25 in cash and $4.50 in Netflix stock per WBD share at close. The transaction is scheduled to complete after WBD separates its Global Networks business, with closing expected in 12–18 months. Netflix forecasts $2–3 billion in annual cost savings by year three and expects accretion to GAAP earnings per share by year two.

Transaction structure and terms

Under the agreement, each WBD shareholder receives $23.25 cash plus $4.50 in Netflix common stock per share at closing. The total enterprise value of the transaction is about $82.7 billion. The stock component uses a collar tied to Netflix’s 15-day VWAP measured three trading days prior to close. The collar sets a value band between $97.91 and $119.67. If Netflix’s VWAP falls below the band, WBD shareholders receive 0.0460 Netflix shares per WBD share. If above the band, they receive 0.0376 shares.

The boards of both companies unanimously approved the deal. Completion requires WBD shareholder approval, regulatory clearances, the separation of Discovery Global, and customary closing conditions.

Strategic rationale and operational commitments

Netflix positions the acquisition as a strategic expansion of content, studio capabilities, and global reach. The agreement keeps Warner Bros.’ current operations intact, including theatrical releases and third-party production through the Warner Bros. television studio. Netflix expects to maintain theatrical distribution and continue producing exclusive content for its platform.

The transaction adds HBO and HBO Max content and Warner Bros.’ franchises to Netflix’s library. Management forecasts at least $2–3 billion of cost savings per year by the third year following close. Netflix also expects the deal to be accretive to GAAP earnings per share by the second year.

Timing, governance, and approvals

The companies expect to complete WBD’s planned separation of its Global Networks division — Discovery Global — before closing. Discovery Global will become a publicly traded company holding cable channels, news and sports networks, and related digital products. The separation is expected in Q3 2026. Following that separation, the merger closing window is estimated at 12–18 months from announcement, subject to regulatory approvals and shareholder votes.

Both companies will file required registration and proxy materials with the U.S. Securities and Exchange Commission in connection with the merger. The definitive proxy statement and related registration statement will provide full transaction details to investors and stockholders.

Financial advisors, break fees, and legal counsel

Moelis & Company LLC served as Netflix’s financial advisor. Skadden, Arps, Slate, Meagher & Flom LLP served as Netflix’s legal counsel. Wells Fargo, BNP, and HSBC provided committed debt financing for the transaction. Warner Bros. Discovery engaged Allen & Company, J.P. Morgan, and Evercore as financial advisors. Wachtell Lipton, Rosen & Katz, and Debevoise & Plimpton LLP served as legal advisors to WBD.

The agreement includes break-up fees: Netflix would pay a $5.8 billion reverse break-up fee if the deal fails to close. Warner Bros. Discovery would pay $2.8 billion if it elects to terminate the agreement to pursue an alternative transaction.

Industry implications drawn from the source

Adding Warner Bros.’ library and HBO Max content strengthens Netflix’s content depth and studio footprint. The transaction consolidates marquee franchises and expanded production capabilities under Netflix’s streaming model. Management frames this as a long-term value creation move, targeting subscriber growth, greater engagement, and incremental revenue and operating income.

The companies note potential cost synergies and production scale increases, while also acknowledging regulatory and integration hurdles that must be satisfied before closing.

Compliance, disclosures, and risk language

Both firms highlighted that the merger involves forward-looking statements. The parties will file formal SEC documents — including a registration statement on Form S-4 and the proxy statement/prospectus — that will contain detailed risk factors. The announcement makes clear that regulatory approvals, shareholder consents, and customary closing conditions must be satisfied before any consummation of the transaction.

Investors and security holders are urged to read the forthcoming registration and proxy materials when available.

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Open question to discuss

How should content platforms and studios prioritize distribution models when major franchises move under a single streaming owner?