Netflix is in exclusive deal talks to acquire Warner Bros. Discovery to buy
Netflix has entered into exclusive talks with Warner Bros. Discovery to acquire the company’s film and television studio, as well as its streaming service HBO Max. Variety confirms.
The development comes after a weeks-long bidding war for the assets at Warner Bros. Discovery between Netflix and rivals Paramount Skydance and Comcast. Paramount Skydance, led by newly created studio CEO David Ellison, had tried to sell Warner Bros. to fully acquire Discovery in an all-cash deal, while both Netflix and Comcast had only submitted bids for the company’s studio and streaming businesses. The news of the exclusive window was first reported by Bloomberg News.
The move marks a shocking reversal for Netflix, which for years has resisted opportunities to make a big bet on traditional Hollywood assets. Ted Sarandos and Greg Peters, Netflix’s co-CEOs, have long argued that the company’s growth hasn’t been hampered by the lack of a deep content library. But the chance to explore Warner Bros.’ vast film and TV library. and acquiring the equally renowned HBO brand was too tempting to pass up. Any deal would undoubtedly face a difficult path to regulatory approval, given the unpredictability of the Trump administration. The Directors Guild of America and Cinema United, the exhibition organization, have already issued statements warning that the marriage of Netflix and WBD would have serious consequences for moviegoing.
The news follows months of speculation and anxiety in the larger entertainment and media sector surrounding the potential sale of Warner Bros. Discovery. Ellison’s Paramount was the first and perhaps most aggressive bidder at about $27 per share for all of Warner Bros. Discovery. Netflix and Comcast later entered to cement an intense horse race.
During the bidding war, the highest bids were submitted on Monday. Paramount went nuclear Thursday morning, accusing Netflix of impropriety surrounding its bid for the storied studio, arguing that it “has a credible basis to believe that the sale process has been tainted by management conflicts, including the potential personal interests of certain members of management in post-transaction roles and compensation.”
Paramount’s bid submitted Monday included financial support for three Middle Eastern sovereign wealth funds. Variety reported.
Warner Bros. Discovery, the byproduct of a hastily arranged 2022 marriage of AT&T’s WarnerMedia and Discovery Communications, was thrust into the M&A game in October when David Ellison made an unsolicited bid for the entire WBD.
Prior to Ellison’s move, Warner Bros. Discovery chief David Zaslav and the board are committed to addressing the slump in the company’s stock prices with a spinoff plan that will take Warner Bros. would separate studio and HBO Max streaming from the old linear cable channels (CNN, TNT, TBS et al.) that defined the company’s strength in the Time Warner era. WBD confirmed plans to move forward with a spin-off plan expected to be completed in mid-2026. Ellison was already eyeing a WBD acquisition to add needed strength and scale to Paramount’s streaming and studio operations. But WBD’s divestiture plan likely forced Ellison to act sooner or later.
Should Netflix and Warner Bros. Discovery, it would mean a seismic transformation in the media and entertainment landscape. As the leader in paid streaming services, Netflix has become by far the largest and most influential company in Hollywood, with a market capitalization of $437 billion, far surpassing even Disney ($190 billion).
Rather than buying its way into Hollywood, Netflix built a dominant position by starting out as the first premier streamer, starting with a library of licensed content from traditional studios before developing original content, with both third-party studios and wholly-owned productions such as the “Stranger Things” fantasy franchise.
A deal would give Netflix rights to the Warner Bros. library — from “Casablanca” and “The Maltese Falcon” to “Friends” to “Ted Lasso” — and its IP, including Batman, Superman, Wonder Woman and other comic book characters at DC Studios. HBO’s library includes landmark TV series such as “The Sopranos,” “The Wire,” “Deadwood,” “Game of Thrones,” “Sex and the City,” “Curb Your Enthusiasm” and “Six Feet Under.” WBD’s assets also include broad film and TV rights to the Harry Potter franchise.
But a potential Netflix-WBD acquisition will also face an uphill battle in gaining government approval for the deal, given Netflix’s size and market power. On Thursday, Variety exclusively reported that a consortium of A-list talent signed an open letter to Congress, calling on members to speak out against a Netflix deal and arguing that the streamer would “effectively keep a noose around the cinema market” by reducing output to movie theaters and lowering subsequent licensing fees for home video windows. The statement was signed anonymously, with the explanation that this was done “not out of cowardice,” but out of fear of retaliation, given Netflix’s significant market power.
On Thursday evening, the Directors Guild of America issued a strongly worded statement underscoring its doubts about the transaction.
“The news that Netflix has acquired the exclusive rights to negotiate WBD raises major concerns for the DGA,” the guild said. “We believe that a vibrant, competitive industry – one that fosters creativity and encourages true competition for talent – is essential to securing the careers and creative rights of directors and their teams. We will be meeting with Netflix to outline our concerns and better understand their vision for the future of the company. While we are conducting this due diligence, we will have no further comment.”
The deal has drawn particularly sharp criticism in the film production community and among exhibitors, who see Netflix’s strategic goals as a serious threat to cinematic tradition. Sources close to Netflix, however, urged viewers to reserve judgment and speculation on its strategic approach to theatrical film releases amid the cutthroat dynamics of a bidding war. These sources said Netflix would naturally evaluate its film distribution protocols and business priorities if it were to make such a massive acquisition like Warner Bros., which is built to distribute films around the world.
Another dire warning about the consequences of a Netflix-WBD union came late Thursday from Cinema United, the exhibition industry trade group formerly known as the National Association of Theater Owners.
“Netflix’s proposed acquisition of Warner Bros. poses an unprecedented threat to the global exhibition industry. The negative impact of this acquisition will impact theaters from the largest circuits to independent small-town theaters in the United States and around the world,” said Michael O’Leary, president and CEO of Cinema United. “Cinema United stands ready to support industry changes that will lead to increased film production and give consumers more options to enjoy a day at the local theater. But Netflix’s stated business model does not support cinema screenings. In fact, the opposite is the case. Regulators should look closely at the details of this proposed transaction and understand the negative impact it will have on consumers, exhibitions and the entertainment industry.”
O’Leary did not shy away from pointing out the distinction between the medium in which Netflix flourished – television – and theatrical films. He also pointed to the trickle-down effects of moviegoing on restaurants, bars and other retailers, calling exhibitors “a Main Street industry.”
“Netflix’s success is television, not movies on the big screen. A true commitment to exhibition means a robust slate of films with a meaningful period of theatrical exclusivity, supported by marketing. Sporadic and shortened theatrical releases to meet pricing criteria in a handful of theaters is not a commitment to exhibition,” O’Leary said. “Movie theaters are cultural and economic anchors of communities of all sizes – we are a Main Street industry. Research shows that for every dollar spent at a local movie theater, an additional $1.50 is spent at surrounding businesses in the community – restaurants, bars, shopping centers, transportation. That’s what’s at risk here if we approve fewer movies into the marketplace. Theaters will close, communities will suffer, jobs will be lost.”
(Cynthia Littleton contributed to this report.)
