Netflix introduced Friday it is reached a deal to purchase items of Warner Bros. Discovery, bringing a swift finish to a dramatic bidding course of that noticed Paramount Skydance and Comcast additionally vying for the legacy belongings.
The transaction is comprised of money and inventory and is valued at $27.75 per WBD share, the businesses mentioned. That places the fairness worth of the deal at $72 billion, with a complete enterprise worth of roughly $82.7 billion.
Netflix will purchase Warner Bros.’ movie studio and streaming service, HBO Max. Warner Bros. Discovery will transfer ahead with its beforehand deliberate spinout of Discovery World, which incorporates its large portfolio of pay TV networks, resembling TNT and CNN.
The blockbuster deal brings collectively the streaming big Netflix, which has upended the media trade in recent times, and the storied Warner Bros. movie studio, recognized for its library together with “The Wizard of Oz,” the Harry Potter franchise and the DC comics universe. It’ll additionally embody the content material of HBO Max, together with “The Sopranos” and “Sport of Thrones.”
“I do know a few of you are stunned that we’re making this acquisition, and I definitely perceive why. Over time, now we have been recognized to be builders, not patrons,” Netflix co-CEO Ted Sarandos mentioned on an investor name Friday morning.
“We have already got unbelievable exhibits and films and an incredible enterprise mannequin, and it is working for expertise, it is working for shoppers and it is working for shareholders. This can be a uncommon alternative,” he mentioned. “It will assist us obtain our mission to entertain the world and to deliver individuals collectively via nice tales.”
Netflix’s preliminary bid for WBD’s studio and streaming belongings was for $27 a share, based on an individual accustomed to the matter. That trumped Paramount’s supply on the time and turned the trajectory of the gross sales talks in Netflix’s course, mentioned the individual, who requested to not be named as a result of the discussions had been non-public.
The acquisition is predicted to shut after the TV networks separation takes place, now anticipated within the third quarter of 2026. The businesses estimated the transaction would shut in 12 to 18 months.
CNBC has reached out to Comcast and Paramount for remark.
As a part of the deal, each Warner Bros. Discovery shareholder will obtain $23.25 in money and $4.50 in shares of Netflix widespread inventory for every share of WBD widespread inventory excellent following the shut of the deal.
Netflix and Warner Bros. Discovery mentioned every of their boards of administrators unanimously authorised the deal, which is topic to regulatory approval in addition to approval of WBD shareholders.
Netflix has agreed to pay a $5.8 billion reverse break-up charge if the deal will not be authorised, based on a Securities and Trade Fee submitting. Warner Bros. Discovery would pay a $2.8 billion breakup charge if it decides to name off the deal to pursue a special merger.
Edging out Paramount
The merger may invite regulatory scrutiny given the scale of the expansive streaming companies for every firm. Netflix mentioned it surpassed 300 million world streaming subscribers on the finish of 2024, the final time it publicly reported its buyer rely. Warner Bros. Discovery mentioned it had 128 million world subscribers as of Sept. 30.
Paramount raised the potential for antitrust considerations earlier this week in a letter to Warner Bros. Discovery administration as second-round bids got here in, The Wall Road Journal reported.
The newly merged Paramount Skydance made its preliminary run at Warner Bros. Discovery in September, submitting three bids earlier than WBD launched a proper sale course of. The David Ellison-run firm was the one suitor bidding for the whole lot of WBD’s portfolio — the movie studio, streaming enterprise and TV networks.
Paramount’s ultimate bid, acquired Thursday night, was for $30 per share, all money, individuals near the matter informed CNBC, talking on the situation of anonymity about confidential dealings. Paramount’s supply included a $5 billion breakup charge if the transaction did not win regulatory approval after roughly 10 months, the individuals mentioned.
Earlier this week, Paramount raised questions in regards to the “equity and adequacy” of the sale course of, contending Warner Bros. Discovery favored Netflix.
“It has grow to be more and more clear, via media reporting and in any other case, that WBD seems to have deserted the appearance and actuality of a good transaction course of, thereby abdicating its duties to stockholders, and launched into a myopic course of with a predetermined consequence that favors a single bidder,” Paramount attorneys mentioned in a letter to Warner Bros. Discovery administration.
— CNBC’s David Faber, Kasey O’Brien and Laya Neelakandan contributed to this report.
Disclosure: Comcast is the dad or mum firm of NBCUniversal, which owns CNBC. Versant would grow to be the brand new dad or mum firm of CNBC upon Comcast’s deliberate spinoff of Versant.
