How Netflix clinched a $72bn Warner Bros Discovery deal
What began as a fact-finding exercise for Netflix has ended in one of the largest media deals of the past decade, a transaction poised to reshape the global entertainment industry.
Netflix announced on Friday that it has agreed to acquire Warner Bros Discovery’s film and television studios, along with its streaming division, in a deal valued at $72 billion.
Sources with direct knowledge of the talks told Reuters that although Netflix had publicly dismissed takeover speculation as recently as October, it entered the race after Warner Bros Discovery launched an auction on October 21. The process followed the company’s rejection of three unsolicited bids from Paramount Skydance.
Interviews with seven advisers and executives show that Netflix executives quickly saw value beyond Warner Bros’ vast, century-old content library. Library titles are considered crucial to streaming platforms, accounting for as much as 80 per cent of total viewing, according to one source familiar with the business.
Warner Bros’ theatrical distribution and studio operations were seen as a strong complement to Netflix’s streaming-first model. In addition, sources said HBO Max could benefit from Netflix’s long-standing expertise in scaling streaming platforms globally.
Netflix’s interest intensified after Warner Bros Discovery announced plans in June to split into two publicly traded companies, separating its cash-generating cable networks from its studios, HBO and HBO Max. That move opened the door for potential buyers of the studio and streaming assets.
The competition for the assets heated up in the autumn, with Netflix going head-to-head against Paramount and Comcast-owned NBCUniversal. Warner Bros Discovery formally launched a public auction in October after Paramount submitted a series of escalating offers.
Bankers advising Warner Bros Discovery chief executive David Zaslav also explored options to reverse the planned corporate split, a move that would provide greater flexibility, including a possible sale of the studio and streaming businesses, sources said.
Netflix’s bid was prepared at intense speed. Executives and advisers—including Moelis & Company, Wells Fargo and law firm Skadden, Arps, Slate, Meagher & Flom—held daily calls for nearly two months and worked through the Thanksgiving holiday to meet the December 1 bid deadline.
Warner Bros Discovery’s board also met daily in the final stretch before reaching a decision. Netflix’s proposal emerged as the only fully binding and complete offer, the sources said.
While Comcast proposed merging NBCUniversal’s entertainment division with Warner Bros Discovery to rival Walt Disney, the board preferred Netflix’s deal, citing faster execution and clearer benefits. Paramount’s raised offer, valuing the company at about $78 billion, also raised concerns over financing, according to people familiar with the talks.
To address regulatory uncertainty, Netflix agreed to a $5.8 billion breakup fee—one of the largest in merger-and-acquisition history—underscoring its confidence in securing regulatory approval.
The deal was finalised late on Thursday night, with Netflix executives reportedly breaking into applause on a group call after learning their bid had been accepted, even as some privately admitted they believed the outcome had been a “50-50” chance until the very end.
