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In a move that fundamentally reshapes the global entertainment landscape, Netflix has officially agreed to acquire Warner Bros Discovery. The streaming giant clinched the deal on Friday with a staggering $72 billion offer.
While Netflix publicly downplayed interest in major studios as recently as October, the reality behind closed doors was different. This acquisition combines the world’s largest streamer with a century-old studio, effectively winning Netflix Hollywood’s biggest prize.
Why the Board Chose Netflix
Ultimately, Warner Bros Discovery’s board favoured certainty and speed. According to sources with direct knowledge of the deal, the board preferred Netflix’s bid because it offered immediate benefits.
Furthermore, Netflix demonstrated immense confidence in the deal. To reassure the seller regarding regulatory hurdles, Netflix offered a massive $5.8 billion breakup fee. As one source noted:
No one lights $6 billion on fire without that conviction.
Strategically, the fit was undeniable. Netflix executives recognised that Warner Bros’ deep catalogue of movies and TV shows drives viewership. In fact, library titles can account for up to 80% of streaming time. Additionally, Netflix plans to use its data insights to accelerate the growth of HBO Max.
The Rivals: Paramount & Comcast
Netflix was not the only suitor. The auction, which kicked off on October 21, saw fierce competition from Paramount Skydance and Comcast.
Paramount actually offered a higher price tag. On Thursday, they raised their bid to $30 a share, valuing the company at $78 billion. However, the Warner Bros board rejected this proposal due to serious concerns regarding Paramount’s financing.
Meanwhile, Comcast (NBCUniversal’s parent company) proposed merging its entertainment division with Warner Bros Discovery. While this would have created a rival to Disney, the board felt the merger would take years to execute. Consequently, they viewed Comcast’s longer-term payoff as less attractive than Netflix’s immediate offer.
A Deal Forged Over Thanksgiving
The road to this historic agreement was intense. Following Warner Bros Discovery’s announcement in June to split its assets, Netflix began exploring the acquisition.
By late autumn, the work had accelerated. Netflix’s advisory team, including banks Moelis & Company and Wells Fargo, worked through Thanksgiving week to prepare the bid. Simultaneously, the Warner Bros board met daily for the final eight days leading up to the decision.
On Thursday night, Netflix presented the only offer the board considered binding and complete. When news broke that the offer was accepted, the streaming services giant’s team erupted in cheers, sealing the biggest media deal of the last decade.
