Netflix is buying Warner Bros. Discovery

"I know some of you are surprised we are making this acquisition," Netflix co-CEO Ted Sarandos told Wall Street analysts on a call this morning, in what may be the understatement of the year.

Once Warner Bros. Discovery completes its split between its movie studio business and its cable TV business in 2026, Netflix will acquire the film studio as well as streaming service HBO Max in a deal with an equity value of $72 billion. Shares of Warner Bros. Discovery jumped 6.28% on the news.

We’ve seen this movie before

Sarandos stated just last quarter that Netflix had “no interest in owning legacy media networks,” yet the company is now making its biggest bet on legacy media ever. It’s a surprising choice, given that Netflix has spent more than a decade building franchises from scratch; a slow and expensive process.

But scooping up Warner Bros. Discovery, and with it HBO, gives it instant access to some of the world’s most durable IP, including Harry Potter, Game of Thrones, and Batman—a shortcut that Sarandos framed as a “rare opportunity” to supercharge Netflix’s content library and expand into franchises with built-in global audiences.

History isn’t exactly on Netflix’s side. In 2000, online service provider AOL bought Time Warner for what was then a record-setting $183 billion, a media mega merger that quickly became one of the most infamous corporate mismatches in history, ending in layoffs, regulatory scrutiny, and a messy breakup less than a decade later.

Co-CEO Greg Peters pushed back on the skepticism, arguing that previous media mergers failed because “the company that was doing the acquisition didn’t understand the entertainment business.” Netflix, he said, is different: “We understand these assets that we’re buying, the things that are critical in Warner Bros. are key businesses that we operate in, and we understand.”

Investors aren’t fully convinced. Netflix shares fell 2.89% today.

The plot thickens

The deal is almost certain to trigger antitrust scrutiny. Three US senators cautioned that a Warner Bros. sale could be influenced by “political favoritism and corruption,” and argued that combining Netflix with HBO Max would create a streamer controlling more than 30% of the market, a level regarded as problematic under antitrust standards.

Netflix may also face a fight from Paramount Skydance, which has already questioned whether Warner Bros. Discovery ran a fair sale process. Paramount has pointed to reports that WBD’s management favored Netflix’s bid, even though they had submitted multiple offers, including an all-cash proposal. Paramount shares fell 9.82% today.

The Trump administration has also expressed “heavy skepticism” about the deal, a stance that could be amplified by Paramount CEO David Ellison’s billionaire father, Larry Ellison, a close ally of Donald Trump.

Hollywood loves a sequel, and this saga is far from over.—SY