Netflix to buy Warner Bros. after split for $109 billion
The move comes after latest round of bids for media company; Paramount and Comcast also made offers.
Netflix has agreed to buy Warner Bros. in a $US72 billion ($109bn) deal after the entertainment company splits its studios and HBO Max streaming business from its cable networks, a deal that would reshape the entertainment and media industry.
The cash and stock deal was announced Friday after the two sides entered into exclusive negotiations following the latest round of bids for the media company known for Superman and the Harry Potter movies and hit TV shows such as Friends.
The offer is valued at $27.75 per Warner Discovery share and has an enterprise value of roughly $US82.7 billion ($124.6bn).
Paramount had sought to buy the entire company, including cable networks such as CNN, TNT and TBS, while Comcast was pursuing the studios and HBO Max streaming business.
“Our mission has always been to entertain the world,” said Ted Sarandos, co-chief executive of Netflix. He added that the combination of the two entertainment giants together can give audiences more of what they love and help define the next century of storytelling.
Warner Discovery Chief Executive David Zaslav said: “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
The deal is expected to face scrutiny in Washington, DC. Several lawmakers have already raised concerns about a Netflix tie-up with HBO Max having too much power in the streaming marketplace.
Warner Discovery and Netflix said they expect the deal to close in 12 to 18 months.
All three companies came in with sweetened offers this week. Netflix, home to Stranger Things and Love Is Blind, submitted a mostly cash bid, The Wall Street Journal previously reported.
Netflix, the biggest subscription streaming service, hopes Warner Discovery’s prolific movie and TV studios, along with its libraries and streaming service HBO Max, will bolster its offerings. A merger would be its largest acquisition ever by far.
Warner Discovery is continuing with plans to split itself into two separate companies, one comprising the studio and streaming assets and the other containing its global cable network operations, before closing a potential deal with Netflix.
Netflix’s interest in Warner Discovery has raised concerns among some Washington lawmakers and law-enforcement officials that acquiring HBO Max would give it too much power in the streaming marketplace, the Journal previously reported.
A Netflix acquisition of Warner Discovery streaming and studio assets raises questions about how the streaming giant’s business model might change in the future, analysts have said. For example, Warner’s film studio releases its movies in theatres long before they hit streaming, while Netflix currently makes films primarily to drive subscriptions to its platform.
Warner’s TV studio sells shows to several networks and streaming services, including rivals of both HBO Max and Netflix. Netflix has historically kept its shows in-house.
The deal is a blow to Paramount CEO David Ellison’s ambitions of bringing together two famed entertainment brands. Mr Ellison took control of Paramount earlier this year.
Paramount wrote in a Wednesday letter to Warner Discovery Chief Executive David Zaslav that the company had “embarked on a myopic process with a predetermined outcome that favours a single bidder.”
Paramount earlier criticised Netflix’s bid in a letter to Warner Discovery’s lawyers, saying a sale to the streamer would likely “never close” because of potential regulatory challenges here and abroad, given its global dominance.
Wall Street Journal
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