Netflix enters exclusive negotiations to acquire Warner Bros Discovery’s studio/streaming assets
Netflix has seemingly emerged as the victorious bidder in the race for Warner Bros Discovery (WBD), with the streaming giant on Thursday entering exclusive negotiations to acquire the studio and streaming assets of the storied Hollywood company.
Netflix has put up a mostly cash offer valuing the studio/streaming part of WBD at around US$28 per share. Paramount tabled an offer of around US$27 per share for the entirety of WBD (including its global linear assets), according to a CNN report, as part of the second-round bidding process.
Netflix has agreed to pay a US$5bn “break-up fee” to WBD in the event the deal does not close, a provision Paramount also reportedly put forward. Bloomberg was first to report that Netflix and WBD had entered exclusive negotiations.
However, this would likely only be the beginning of a long regulatory review and potential pushback from Paramount, which earlier on Thursday wrote a letter to WBD’s board arguing the sale process had been “unfair” and “tilted” favourably towards Netflix.
In its letter, Paramount, which previously had three separate bids rejected, said the WBD auction had been a “myopic process with a predetermined outcome that favours a single bidder.” The David Ellison-led company also alluded to “chemistry” between the management teams of Netflix and WBD.
Paramount was reportedly willing to give WBD president and CEO David Zaslav a role if it was successful. It is not entirely clear whether Zaslav would have a role in the context of a Netflix/WBD tie-up.
The deal will likely be scrutinised by the Department of Justice, which is thought to already be preparing a legal challenge to block it in the US. Other regions, including Europe, would also likely take a close look at the deal and investigate whether it raises antitrust concerns.
In addition, there is major opposition to the deal in Hollywood, with many fearing it could have a devastating impact on the theatrical marketplace. Netflix, for its part, has reportedly claimed it would continue to release movies in theatres if its bid is successful, but the streamer’s leadership team has repeatedly said that putting films in theatres is not part of its business model. On Thursday, Variety reported that a group of anonymous Hollywood industry players sent a letter to US Congress saying Netflix would “hold a noose around the theatrical marketplace” if it were to succeed in buying WBD’s studio.
If approved, the deal would give Netflix ownership of Warner Bros Television, Warner Bros Motion Picture Group, DC Studios, HBO, HBO Max and Warner Bros Gaming Studios, as well as its enormous film and television libraries.
It would also completely reshape Netflix’s global business, as well as forever changing the Hollywood and international production sectors.
Just this past week, HBO and HBO Max boss Casey Bloys was in London showcasing the network and SVoD’s 2026 slate and touting the impending launch of HBO Max in the UK, Italy, Germany and several other European markets. Should Netflix be successful in its bid, it raises questions over the future of HBO Max, with many insiders feeling it is unlikely Netflix would continue to run a separate streamer.
Netflix had around 301 million subscribers at the end of last year, when it stopped reporting subscriber numbers. HBO Max has 128 million globally, and WBD has said it is on course to reach 150 million by the end of next year. It would also take Netflix into new lines of business, including content licensing and producing shows for third parties, all things that have previously set it apart from the traditional Hollywood studios.
As WBD sale talk heated up in October, Netflix co-CEOs Ted Sarandos and Greg Peters played down their interest, saying the streamer has historically been a builder rather than a buyer. Peters also said mega-mergers have a poor track record in Hollywood.
There have been three main bidders in the process, with Comcast also tabling offers in both rounds.
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