Netflix to buy Warner Bros Discovery in deal of the decade

NEW YORK: Streaming giant Netflix said Friday it will buy film and television studio Warner Bros. Discovery for nearly USD83 billion, the entertainment industry’s biggest consolidation deal this decade.

The acquisition gives Netflix access to a vast film catalog as well as the prestigious streaming service HBO Max.

Over the decades, Warner Brothers has produced film classics including “Casablanca” and “Citizen Kane”, as well as more recent blockbuster shows including “The Sopranos”, “Game of Thrones” and the “Harry Potter” movies.

“Together, we can give audiences more of what they love and help define the next century of storytelling,” said Ted Sarandos, co-CEO of Netflix, which has produced global hits including “Stranger Things”, “KPop Demon Hunters” and “Squid Games”.

The biggest previous such deal was Disney’s USD71 billion acquisition of Fox in 2019.

The transaction values Warner Bros. Discovery at USD27.75 per share, implying a total equity value of approximately USD72.0 billion and an enterprise value — including debt — of around USD82.7 billion.

Warner Bros. Discovery shares closed at USD24.54 on the Nasdaq on Thursday.

“Today’s announcement combines two of the greatest storytelling companies in the world,” said David Zaslav, President and CEO of Warner Bros. Discovery, in the statement.

The transaction, which was unanimously approved by the boards of both companies, is to close within 12 to 18 months, they said.

“Netflix aims to dominate Hollywood,” said Kathleen Brooks, research director at XTB, a trading and investment firm.

The analyst warned of a number of potential issues surrounding deal, including fears of a Netflix monopoly once it commands such “a colossus in the TV and movie business”.

Antitrust issues expected

Netflix, whose stock weakened as speculation on the imminent tie-up heated up in New York trading Thursday, “has never attempted a deal of this size before, which could lead to some concern about how the new mega company will be managed going forward”, she said.