Netflix is in exclusive talks to acquire Warner Bros. Discovery’s film and TV studios and HBO Max streaming service, according to sources from Bloomberg. That suggests Netflix submitted a superior offer to rivals including Paramount Skydance Corp (owned by billionaire Larry Ellison) and Comcast, which owns NBCUniversal. The deal could be consummated within days and, if approved, would change the landscape of Hollywood and the streaming market.
Warner Bros. Discovery’s cable channels including CNN, TBS and TNT, valued at more than $60 billion, would not be part of the deal and spun off prior to the closing. However, Netflix would become the owner of the HBO network and its library of series (The Sopranos, Game of Thrones, etc.), along with its Burbank studios and massive film and TV archive consisting of 12,500 feature films and 2,400 TV series, including properties like Batman, Lord of the Rings and Friends.
A big sweetener offered by Netflix was a $5 billion breakup fee if the deal isn’t approved by regulators, according to people familiar with the discussions. That’s a considerable risk on Netflix’s part, as the acquisition is likely to be closely scrutinized by the FCC and even President Trump himself, who reportedly has close ties to Ellison. It would also need to pass muster with regulators from other nations, considering the wide reach of WBD and Netflix.
After multiple suitors, including Paramount Skydance expressed interest in buying Warner Bros. Discovery, CEO David Zaslav put the company up for sale in October. The bidding process has been heated, with Paramount’s lawyers complaining that WBD “embarked on a myopic process with a predetermined outcome that favors a single bidder,” namely Netflix. Paramount argued that its deal would be more palatable to regulators around the world.
However, Zaslav’s camp has said that it would achieve the best value in a sale by splitting off its cable assets and doing two separate deals, CNN reported. Both Paramount Skydance and Comcast submitted deals to buy all of WBD’s assets.
Netflix offered around $28 a share for WBD minus the cable assets, according to Deadline. Shares were as low as $7.50 earlier this year. The acquisition would be far and away the largest for Netflix, which has historically favored organic growth.
An acquisition could have a huge impact on streaming customers and filmgoers. Would Netflix merge its catalog with HBO Max or continue to run the latter as a separate service? It’s also not clear if Netflix would honor Warner Bros.’ commitment to theatrical releases, considering that Netflix CEO Ted Sarandos has called movie theatres an “outdated concept.”
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