Key Takeaways
- Netflix said Friday it agreed to acquire Warner Bros. Discovery in an $83 billion deal.
- Warner Bros. Discovery still plans to split its cable TV channels like CNN and TBS off into a standalone company before its TV and movie studios and streaming services are acquired by Netflix.
The bidding war for Warner Bros. Discovery (WBD) is officially over, as the entertainment giant and Netflix (NFLX) announced an $83 billion deal Friday.
Warner Bros. Discovery plans to continue with its previously planned break-up, which will involve spinning off its cable TV channels including CNN and TBS into a standalone business, leaving the remaining studios that make TV and movies and the company’s streaming services to be acquired by Netflix for $27.75 per share. The companies expect the deal to close in the third quarter of next year.
Netflix co-CEO Ted Sarandos said Friday that combining with Warner Bros. Discovery will help both companies “define the next century of storytelling.”
Warner Bros. Discovery shares were little changed in premarket trading Friday, while Netflix shares fell 3.5% following the announcement.
Why This Is Significant
Netflix acquiring Warner Bros. Discovery could reshape the streaming landscape, as the company will own both its namesake service and HBO Max. The deal would give Netflix even more influence in a streaming industry already dominated by a small number of firms.
Late Thursday night, reports emerged that Netflix and Warner Bros. Discovery had entered exclusive deal talks, with competing bidders Paramount Skydance (PSKY) and Comcast (CMCSA) looking to be out of the running.
The bidding war started earlier this year, when Paramount started to make offers to acquire all of Warner Bros. Discovery after the company completed its own merger with Skydance, owned by the Ellison family. Netflix and Comcast entered the running later.
Now, the deal could face regulatory scrutiny over whether it would make Netflix too dominant a player in streaming. Paramount has reportedly argued that the industry would become too consolidated by Netflix’s win.