Netflix announced plans Friday to acquire Warner Bros. Discovery’s studio and streaming business, in a deal that will send shock waves through Hollywood and the broader media landscape.

The cash-and-stock deal values the business at $82.7 billion, including debt. The acquisition is expected to close after Warner Bros. Discovery carves out its cable unit, which the companies expected be completed by the third quarter of 2026. That means there will be a separate public company controlling channels such as CNN, TNT and Discovery.

Netflix is already the world’s largest paid streaming service, with more than 300 million subscribers. Bulking up with Warner Bros. Discovery assets would create a colossus with greater leverage over theater owners and entertainment-industry unions. It could force smaller companies to merge as they scramble to compete.

The acquisition would also complete the conquest of Hollywood by tech insurgents. Instead of acquiring studios, tech companies have mostly grown under their own steam in Hollywood. In 2022, Amazon closed its $8.5 billion acquisition of Metro-Goldwyn-Mayer, home to James Bond and Rocky franchises.

“In a world where people have so many choices, more choices than ever on how to spend their time, we can’t stand still,” Ted Sarandos, Netflix’s co-CEO said in a conference call. “We need to keep innovating and investing in stories that matter most to audiences, and that’s what this deal is all about. The combination of Netflix and Warner Bros. creates a better Netflix for the long run.”

The deal came after a bidding war that pitted Netflix, Comcast and Paramount against each other. The three companies submitted sweetened bids this week. Netflix offered mostly cash.

Comcast has also been bidding for Warner Bros. Discovery’s studios and HBO Max streaming service. David Ellison, the Paramount CEO armed with billions from his father, has been trying to buy all of Warner Bros. Discovery, including traditional television channels like CNN and TNT.

Netflix Would Continue Theatrical Releases

The pitch from Netflix was notable in part because it included a pledge to continue theatrical releases for movies from Warner Bros. Discovery. That is a significant development for Netflix, which pioneered at-home viewing and has so far avoided going all in at the box office.

Netflix has never attempted an acquisition even remotely close to this size.

The emergence of Netflix as a formidable bidder for Warner Bros. Discovery’s assets surprised many in the industry because of how it contradicts the streaming giant’s ethos as a company. “We come from a deep heritage of being builders rather than buyers,” a co-CEO, Greg Peters, said in October at the Bloomberg Screentime conference in Los Angeles.

Any deal would need approval from federal regulators. How the Trump administration evaluates antitrust concerns in any of the proposed deals will depend in part on how it defines the key participants in a media industry that is rapidly evolving as technology giants like Apple and Amazon become rivals to legacy players.

Politics have also seeped into some deal approvals during the Trump administration. Ellison has cultivated a relationship with President Donald Trump, who has praised his family’s ownership of Paramount. Brian Roberts, the CEO of Comcast, has found himself at odds with Trump, with the president calling him a disgrace to broadcasting.

If the deal falls through because of a failure to get the necessary approvals, Netflix would pay a $5.8 billion break fee to Warner Bros. Discovery. If the agreement was broken by a delay or change of heart by Warner Bros. Discovery, it would owe Netflix $2.8 billion.

On Thursday, a group of anonymous feature film producers sent a letter to Congress with “grave concerns” about Netflix buying Warner Bros. Discovery. “Netflix views any time spent watching a movie in a theater as time not spent on their platform,” the letter said. “They have no incentive to support theatrical exhibition, and they have every incentive to kill it.”

‘Monopolistic Control’

The letter also voiced worry about “monopolistic control” of the streaming market. The producers said they didn’t sign their names to the letter out of “fear of retaliation.”

More than any movie company, Warner Bros. symbolizes the romance of Old Hollywood. Bette Davis and James Cagney acted on its soundstages. Its 100-year-old library includes “Casablanca,” “The Maltese Falcon,” “Bonnie and Clyde,” “Dirty Harry,” “The Shining” and “Chariots of Fire.” As a result of dealmaking in the 1990s, Warner Bros. also controls MGM classics like “The Wizard of Oz” and “Gone With the Wind.”

Over the spring and summer, Warner Bros. had one of the most successful box office runs in its history, delivering eight hits in a row, including Ryan Coogler’s “Sinners” and Paul Thomas Anderson’s “One Battle After Another,” both of which are expected to be a force at the coming Academy Awards.

HBO has long been the No. 1 premium television operation in Hollywood. Its roster of current hits includes “Euphoria,” “The Gilded Age” and “The White Lotus.”

By swallowing all of this and more — Warner Bros. also controls Bugs Bunny and television colossuses like “Friends” and “Game of Thrones” — Netflix would greatly strengthen its content hand.

Netflix has shown that it can create hits like “Stranger Things” and “KPop Demon Hunters” from unproven intellectual property. But it has lacked the kind of “enduring, multigenerational franchises that drive recurring engagement from both first-time and longtime viewers,” Robert Fishman, a MoffettNathanson analyst, wrote in a Nov. 12 report.

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This article originally appeared in The New York Times.

By Brooks Barnes, Lauren Hirsch and Nicole Sperling/Mark Abramson
c. 2025 The New York Times Company