Netflix to acquire Warner Bros. studio, streaming services

Netflix struck a deal Friday to buy Warner Bros. Discovery, the Hollywood giant behind “Harry Potter” and HBO Max, in a $72 billion deal that would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.

If approved by regulators, the merger would put two of the world’s biggest streaming services under the same ownership — and join Warner’s television and motion picture division, including DC Studios, with Netflix’s vast library and its production arm, which has released popular titles such as “Stranger Things” and “Squid Game.”

The proposal could draw intense antitrust scrutiny, particularly for its effects on movie making and streaming subscriptions.

“Netflix is the top streaming service today. Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry,” said Mike Proulx, vice president and research director at Forrester, a market research company.

The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt. The transaction is expected to close in the next 12 to 18 months, after Warner completes its previously announced separation of its cable operations. Not included in the deal are networks such as CNN and Discovery.

One of the big unanswered questions, Proulx added, is whether HBO Max and Netflix would “stay as separate streaming services or combine into a mega streaming service.”

But either way, he said, customers could see some price relief in the form of a single subscription bill or bundle promotions, which would be a welcome change as streaming prices continue to rise and consumers feel the pinch of paying for multiple services.

Of course, that all depends on whether the deal goes through. Netflix on Friday maintained that the addition of HBO and HBO Max programming will give its members “even more high-quality titles” and “optimize its plans for consumers.”

Others warned that a Netflix-Warner combo could create an even bigger entertainment titan with ramifications for both consumers and people working across the film and TV industry. Critics said the consequences could include job losses and a reduced variety of content.

Gaining Warner’s legacy studios would mark a notable shift for Netflix, particularly its presence in theaters. Under the proposed acquisition, Netflix has promised to continue theatrical releases for Warner’s studio films, honoring Warner’s contractual agreements.

Netflix has kept most of its original content within its core online platform. But there have been exceptions, including qualifying runs for its awards contenders, including this year’s “Frankenstein,” limited theater screenings of a “KPop Demon Hunters” sing-a-long and its coming “Stranger Things” series finale.

Critics said a Netflix-Warner combo would be bad news for moviegoers and for people who work in theaters. Cinema United — a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally — was quick to oppose the deal, which it said “poses an unprecedented threat to the global exhibition business.”

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” Michael O’Leary, CEO of Cinema United, said Friday. “Theaters will close, communities will suffer, jobs will be lost.”

The Writers Guild of America sounded a similar alarm and called for the merger to be blocked.

The Producers Guild of America said the Netflix deal must prove that it protects workers’ livelihoods and theatrical distribution. “Legacy studios are more than content libraries — within their vaults are the character and culture of our nation,” the union added.

Warner Bros., which is 102 years old, is one of the “big five” studios left in Hollywood. If the Netflix sale goes through, the remaining legacy studios would be Disney, Paramount, Sony Pictures and Universal.


(AP Photo Jae C. Hong)