Netflix Strikes $72 Billion Deal to Acquire Warner Bros. and HBO, Setting Up Hollywood’s Biggest-Ever Merger

In a major development in media industry, Netflix has triumphed in the bidding war for Warner Bros. and HBO, announcing a deal that could combine two of the three biggest streamers with one of the largest traditional movie and television studios.

If the deal goes through, it will fundamentally reshape Hollywood at a precarious time for the entertainment business. It would give Netflix control of some of the industry’s most valuable intellectual property, including Batman, Harry Potter and Game of Thrones, and would give a company that historically had very little interest in movie theaters oversight of the studio that put more butts in seats than any other this year.

But first it will be subjected to intense regulatory review in the US and other countries.

Netflix announced the blockbuster deal with Warner Bros. Discovery on Friday morning. It has agreed to buy the legendary TV and movie studio and assets like the HBO Max streaming service for $72 billion, plus debt.

The announcement jolted Hollywood and jumbled expectations about the next steps for Warner Bros. Discovery, which is also the parent

company of CNN.

Warner Bros. Discovery (WBD) said it is moving forward with its plans to split into two publicly traded halves in 2026. Once the split takes effect, Netflix intends to acquire the Warner half. The other half, Discovery Global, will house CNN and other cable channels.

WBD now expects the split to take effect in the summer of 2026.

But this mega-media merger saga is far from over. Paramount and Comcast, the other media giants known to have submitted offers for WBD, may continue to pursue the company.

Netflix’s (NFLX) stock fell more than 2% in early trading, while Warner Bros. Discovery’s (WBD) stock gained 2%.

For several weeks Paramount was thought to be the frontrunner in the auction for WBD. Paramount executives, who want to buy all of WBD – including its cable assets – exuded confidence about their merger proposal and their mutually beneficial relationship with President Trump.

But Netflix surprised many with the boldness of its bids: The streaming giant submitted two proposals earlier this week that vaulted it ahead of Paramount’s offers, according to sources familiar with the matter.

Netflix co-CEO Ted Sarandos acknowledged the shock on a call with Wall Street analysts Friday morning.

“I know some of you are surprised that we’re making this acquisition. And I certainly understand why. Over the years we have been known to be builders, not buyers,” Sarandos said. “But this is a rare opportunity, and it’s going to help us achieve our mission to entertain the world and to bring people together through great stories.”

Sarandos added that past merger failures happened because the acquiring company was no longer growing and needed a merger to gain ground. That’s not the case for Netflix, he noted, which continues to add subscribers and pad its bottom line with increased engagement.

Netflix agreed to the same costly breakup fee that Paramount proposed during the auction process, a source familiar with the matter told CNN. This means the would-be buyer will pay WBD billions of dollars if the deal is not completed.

That’s critical because the biggest X factor is regulatory approval. Some American politicians have already raised concerns about the potential consolidation.

In recent weeks Paramount CEO David Ellison was viewed as the Trump administration’s favored buyer of WBD. Paramount fanned doubts that regulatory agencies controlled by Trump would approve other proposed deals.

Now some analysts expect a political and legal battle will ensue.