Netflix-WBD: the $82.7 billion deal has been announced, but……

MUMBAI: In a deal that would make even the most ambitious Game of Thrones plotline look tame, Netflix has agreed to acquire Warner Bros for $82.7 billion, creating an entertainment colossus that spans from Casablanca to Squid Game. If you thought streaming wars were brutal before, wait until Netflix controls Batman, Harry Potter and the Sopranos back catalogue.

The streaming behemoth will pay $27.75 per share—$23.25 in cash and the rest in stock—for the century-old studio once Warner Bros Discovery completes its messy divorce from Discovery Global, expected in the third quarter of 2026. WBD shareholders are getting a tidy equity valuation of $72 billion for their troubles, though they’ll have to wait 12-18 months to pocket the windfall whilst regulators poke around and shareholders cast their votes. Netflix is also taking on $10.7 billion of debt that Warner Bros Discovery has on its books for its studio and streaming services. If anything goes wrong, Netflix is on the hook for a whopping $5.8 billion break-up fee.

The transaction represents Netflix’s most audacious land grab yet. Forget incremental growth—this is scorched-earth conquest. The blockbuster deal brings together the streaming giant Netflix, which has upended the media industry in recent years, and the storied Warner Bros film studio, along with HBO Max, production capabilities that could churn out content faster than subscribers can say “just one more episode”, and a library stuffed with cultural touchstones.

Netflix currently commands 301.6 million subscribers globally, whilst HBO Max is the third-largest streamer with 100 million subscribers. Combined, the merged entity would dwarf Disney’s roughly 128 million subscribers by more than three times. A Bank of America analyst report framed it starkly: if Netflix acquires Warner Bros, the streaming wars are effectively over, with Netflix becoming the undisputed global powerhouse.

“Our mission has always been to entertain the world,” declared  Netlfix co-chief executive Ted Sarandos, presumably whilst cackling over spreadsheets showing Harry Potter, Friends and the entire DC Universe joining his streaming empire. The acquisition bundles Warner’s crown jewels—The Sopranos, The Big Bang Theory, Game of Thrones, The Wizard of Oz—with Netflix’s own hits like Wednesday, Bridgerton, Money Heist and the mysteriously titled KPop Demon Hunters. “Together, we can give audiences more of what they love and help define the next century of storytelling,” he added, in case anyone missed the imperial ambitions on display.

Netflix’s other co-chief executive Greg Peters was equally bullish. “Warner Bros has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities,” he said. Translation: more binge-worthy content, more subscribers, more money. Netflix expects to scoop $2 billion-3 billion in annual cost savings by year three—presumably by sacking duplicative executives and merging back-office functions—and reckons the deal will boost earnings per share within two years. Wall Street will be watching those numbers like hawks circling a carcass.

The deal emerged from a weeks-long bidding war that pitted Netflix against Paramount Skydance and Comcast. Paramount, newly helmed by David Ellison, sought to acquire the entirety of Warner Bros Discovery in an all-cash deal, whilst both Netflix and Comcast submitted bids only for the studio and streaming businesses. Paramount’s offer came in closer to $27 per share, whilst Netflix’s final bid reached approximately $28 per share, ultimately clinching the victory.

The auction was anything but genteel. Paramount’s lawyers fired off furious letters questioning whether Warner Bros Discovery had abandoned a fair transaction process and embarked on a “myopic process with a predetermined outcome that favours a single bidder”. The upstart studio raised its proposed break-up fee from $2.1 billion to $5 billion in a last-ditch effort to match Netflix’s terms—to no avail.

Paramount had one trump card it hoped would tilt the scales: David Ellison’s close ties to President Trump. Ellison and his management team were perceived to have a mutually beneficial relationship with the White House, potentially giving them an advantage in getting any deal approved. But Netflix’s sheer financial heft—armed with $60.7 billion in financing from a consortium of banks including Wells Fargo, BNP and HSBC—proved insurmountable. The rest of the moolah is coming from $10.3 billion cash on hand in its books, and about $11.7 billion by way of equity.  

Warner Bros Discovery president and chief executive David Zaslav is putting a brave face on selling off the studio that helped define entertainment for over a century. “Today’s announcement combines two of the greatest storytelling companies in the world,” he said, deploying the sort of corporate-speak that usually accompanies expensive goodbyes. “We will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come,” he added, though he’ll be saying it from the boardroom of Discovery Global, the leftover bits including CNN, TNT Sports, Discovery channels across Europe, and digital products like Discovery+ and Bleacher Report.

If Netflix thought the hard part was winning the bid, it’s in for a rude awakening. Justice Department antitrust officials are likening the Netflix purchase to Ticketmaster buying Madison Square Garden—a comparison that should send shivers down any dealmaker’s spine. Senior White House officials held a meeting about 10 days ago voicing opposition to Netflix’s megadeal over concerns about excessive market power, whilst DOJ antitrust division chief Gail Slater and her senior reports have held a series of meetings discussing plans to launch a sweeping, multiyear investigation if the deal proceeds.

The political backlash is bipartisan and brutal. Senator Mike Lee, who leads the senate judiciary subcommittee on antitrust, said the bid would raise serious competition questions—perhaps more so than any transaction he’d seen in about a decade. Representative Darrell Issa cautioned that merging Netflix with HBO Max would create a company with more than a 30 per cent share of the streaming market, a threshold traditionally viewed as presumptively problematic under antitrust law. Even senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal sent a letter warning that any potential Warner Bros merger could be tainted by “political favouritism and corruption.”

Netflix has been running around Washington trying to convince everyone that their deal is fine from an antitrust standpoint, but no one is buying what they’re saying at senior levels of the White House or DOJ antitrust, is what some are whispering in the corridors. The company has reportedly hired Steven Sunshine of Skadden Arps, an antitrust attorney whose recent track record includes advising on deals that were blocked or abandoned—Visa’s attempted purchase of Plaid, Adobe’s effort to buy Figma, Sabre’s proposed acquisition of Farelogix. Not exactly a confidence-inspiring CV.

Then there’s the small matter of cinema owners, who view Netflix’s bid with all the enthusiasm of turkeys greeting Christmas. Cinema United, the world’s largest exhibition trade association representing over 30,000 movie screens, slammed the proposed acquisition as an “unprecedented threat to the global exhibition business.”

Cinema United  president and chief executive Michael O’Leary warned the deal could remove about 25 per cent of the annual domestic box office, as Netflix tends to release only a handful of films in theatres.

The concerns aren’t paranoid fantasy. O’Leary pointedly noted that Netflix’s success is television, not movies on the big screen, and that sporadic, truncated theatrical releases to meet awards criteria in a handful of theatres is not a commitment to exhibition. Research suggests for each dollar spent in a local movie theatre, an additional $1.50 is spent in surrounding businesses—restaurants, bars, shopping centres, transportation. Cinema closures don’t just hurt exhibitors; they hollow out Main Street.

Netflix has attempted to mollify critics, promising to maintain Warner Bros’s current operations, “including theatrical releases for films.” On a Friday conference call, Sarandos insisted the company has no “opposition to movies in theatres,” noting Netflix released 30 films in cinemas in 2025. But most had far shorter theatrical runs than typical studio releases, and Sarandos has previously described movie theatres as “outdated”—hardly the sort of rhetoric that inspires confidence.

The Directors Guild of America, now led by Christopher Nolan (who released nine films at Warner Bros over 18 years before decamping to Universal), plans to meet with Netflix over “significant concerns.”

An anonymous consortium of A-list talent sent an open letter to Congress arguing that Netflix would “effectively hold a noose around the theatrical marketplace” by reducing output to cinemas and forcing down subsequent licensing fees. The letter was signed anonymously, the group explained, “not out of cowardice” but fear of retaliation, given Netflix’s considerable marketplace power.

The deal’s structure is byzantine even by Wall Street standards. In June, Warner Bros Discovery announced plans to split into two companies—Streaming & Studios (now being flogged to Netflix) and Global Networks (becoming Discovery Global). The separation, now expected in the third quarter of 2026, must occur before Netflix can close the acquisition. It’s corporate surgery on a grand scale, carving up a media empire assembled only three years ago when Discovery acquired WarnerMedia.

Discovery Global will inherit CNN, TNT Sports in the US, Discovery channels, free-to-air channels across Europe, and digital products like Discovery+ and Bleacher Report. Netflix cherry-picks the prestige dramas, blockbuster franchises, and HBO’s library of landmark series including The Wire, Deadwood, Sex and the City, Curb Your Enthusiasm and Six Feet Under. Warner Bros Discovery’s assets also include broad film and television rights to the Harry Potter franchise and the entire DC Studios roster—Batman, Superman, Wonder Woman and the rest of the comic book pantheon.

The stock component comes with a collar mechanism that would baffle most civilians. If Netflix shares trade between $97.91 and $119.67 (measured by 15-day volume-weighted average price three days before closing), WBD shareholders get $4.50 worth of Netflix stock per share. Below that range, they receive 0.046 Netflix shares per WBD share; above it, just 0.0376 shares. It’s financial engineering designed to protect both parties from market volatility, though one suspects the lawyers are the real winners.

It’s hard to overstate what a major pivot this deal represents for Netflix, which has made very few acquisitions in its history, preferring to grow organically. The company built its $437bn market capitalisation (dwarfing even Disney’s $190bn) on the back of subscription revenue and proprietary content. Now it’s making the biggest bet in its 28-year history that old Hollywood magic can turbocharge its streaming dominance.

The deal’s brain trust includes a who’s who of Wall Street and legal eagles. Moelis & Company and Wells Fargo advised Netflix, with Skadden Arps handling the legal heavy lifting. Warner Bros Discovery brought in Allen & Company, JP Morgan and Evercore, with Wachtell Lipton and Debevoise & Plimpton as legal counsel. The transaction was unanimously approved by both boards—though one imagines some directors required rather more convincing than others.

For consumers, Netflix is promising more choice and greater value, though whether “greater value” translates to stable subscription prices remains to be seen. The company has been steadily raising prices for years, and now it controls an even larger slice of premium content. Netflix’s ad-supported tier already boasts 94 million subscribers by May 2025, suggesting the company has successfully trained viewers to accept commercials in exchange for lower costs. The question is whether regulators will view this consolidated power as anti-competitive.

Netflix has just written Hollywood’s biggest plot twist, transforming from Silicon Valley upstart to entertainment empire in barely two decades. Whether audiences will live happily ever after—or find themselves paying ever-higher prices for the privilege of watching Batman fight the Demogorgon—remains to be seen.

The regulatory gauntlet ahead looks brutal. The DOJ is sharpening its antitrust knives, lawmakers from both parties are howling about market concentration, theatre owners are threatening fire and brimstone, and Hollywood’s creative community is circling the wagons. If this deal closes, it won’t be for lack of opposition.

But Netflix has $59 billion in committed financing, a market cap that makes it untouchable by all but a handful of companies, and 301.6 million subscribers who’ve already demonstrated they’ll pay for premium content. The streaming wars were always going to produce a victor. The question was never whether someone would win, but whether the rest of us would lose in the process.

One thing’s certain: the streaming wars just became a rout. And the credits haven’t even started rolling.