Netflix has officially announced its agreement to acquire Warner Bros. Discovery, including its film and TV studios, gaming business, HBO Max, and HBO, in a seismic deal valued at approximately $82.7 billion in total enterprise value, with an equity value of $72 billion. The announcement on Friday followed a weeks-long bidding war against David Ellison’s Paramount Skydance and Comcast. Netflix co-CEO Ted Sarandos acknowledged the company's historical preference for building rather than buying but emphasized the strategic importance of this acquisition to reshape the entertainment landscape.

The cash and stock transaction values each share of WBD at $27.75, with shareholders receiving $23.25 in cash and $4.50 in Netflix common stock. The deal, unanimously approved by both boards, is expected to close within 12-18 months, contingent on regulatory approvals, WBD shareholder consent, and the prior separation of WBD’s TV networks division, Discovery Global, which is now anticipated in the third quarter of 2026. Netflix projects annual cost savings of $2 billion to $3 billion by the third year post-closure and expects the transaction to be accretive to earnings per share by year two.

A central challenge for the deal is securing regulatory approval in the U.S. and abroad, with particular scrutiny from the Justice Department and the Federal Trade Commission on antitrust grounds. Senior officials in the Trump administration expressed "heavy skepticism" about the proposed deal, citing concerns over Netflix's potential for excessive market power, especially with the addition of HBO Max and Warner Bros.' studios. President Donald Trump's opinion holds central importance due to his influence over federal agencies, and his known friendship with the Ellison family, whose Paramount Skydance aggressively bid for WBD, adds another layer of complexity. Paramount Skydance had, in fact, warned WBD that a sale to Netflix would likely "never close" due to regulatory hurdles, arguing it would "entrench and extend Netflix’s global dominance."

Despite these concerns, Netflix executives, including co-CEO Ted Sarandos, expressed high confidence in the regulatory process, describing the deal as "pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth." Sarandos and WBD CEO David Zaslav highlighted the complementary nature of their businesses, with Netflix's platform and technology aligning with Warner Bros.' extensive content creation capabilities, asserting minimal overlap. To underscore their confidence, Netflix agreed to a substantial $5.8 billion breakup fee if the deal fails to close due to regulatory issues.

However, significant opposition has emerged from various quarters. Hollywood organizations like the Writers Guild of America and the theater-owner trade group Cinema United have voiced strong objections, fearing harmful impacts on jobs and competition. Cinema United president Michael O’Leary called it an "unprecedented threat" to the exhibition business. Politicians from both Republican and Democratic parties have also raised antitrust concerns. Senator Elizabeth Warren (D-Mass.) labeled it an "anti-monopoly nightmare," warning of higher subscription prices and fewer choices for consumers, while Representative Darrell Issa (R-Calif.) pointed to Netflix's "unequaled market power" with over 300 million global subscribers. Analysts also foresee a lengthy and difficult regulatory process.

Netflix's strategy involves maintaining Warner Bros.' current operations and building on its strengths. This includes continuing theatrical releases for films, honoring existing pacts through 2029. While Sarandos stated Netflix's general support for movies in theaters, he also hinted that release windows would "evolve to be much more consumer friendly," suggesting shorter exclusive theatrical runs. Initially, HBO Max is expected to remain a standalone service, although the long-term potential for its integration into Netflix remains an open question, akin to how other premium cable brands have been subsumed by streaming platforms. HBO Max ended Q3 2025 with 128 million subscribers, while Netflix has over 300 million worldwide, leading to a recognized "high overlap" of subscribers.

The acquisition also brings into focus the future of physical media and linear television. While Netflix has historically favored digital distribution and discontinued its DVD rental service, the deep intellectual property library of Warner Bros., including franchises like DC Comics and Harry Potter, could benefit from new strategies. Some experts, like CU Boulder professor Ted Striphas, believe physical media, though becoming more of a novelty, may demonstrate resilience, drawing parallels to vinyl records. However, the shift away from physical sales, which once provided significant revenue (e.g., "Batman Begins" DVD sales influencing "The Dark Knight"), continues to impact studios.

Regarding linear TV, Netflix, which purposely excluded WBD's linear channels from its bid, has shown no interest in operating such properties. This raises concerns about the fate of HBO's linear service, which has already seen cuts to multiplex networks and a significant decline in primetime viewership (from 726,000 in 2017 to 154,000 in 2024). Many predict that if the deal goes through, it will accelerate the demise of premium cable as a standalone enterprise, with HBO likely becoming just another brand within Netflix's expanding digital menu. While Netflix aims to combine its global reach and innovative streaming with Warner Bros.' storytelling legacy to create an extraordinary entertainment offering, the journey to finalization is expected to be a strenuous, drawn-out battle in Washington and among industry stakeholders.