Netflix to acquire key Warner Bros. assets in blockbuster $72B deal – News

Netflix Inc. has inked an agreement to acquire several Warner Bros Discovery Inc. units for $72 billion in cash and stock.

The companies announced the deal today. It follows a bidding contest that included Comcast Corp. and Paramount Skydance Corp., which is backed by Oracle Corp. Executive Chair Larry Ellison. The latter company recently accused Warner Bros. of unfairly favoring Netflix during the acquisition talks.

Netflix is buying Warner Bros.’ film and TV show libraries along with multiple business units. Those units include the company’s HBO streaming brand as well as several production studios. The businesses that Netflix is not buying will be spun off into a standalone company, tentatively referred to as Global Networks, that is set to go public next year. Global Networks will absorb CNN, numerous other TV channels and the Discovery+ streaming service.

Netflix will finance the transaction with $59 billion in debt from a group of banks. Wells Fargo will provide nearly half the sum, or $29.5 billion, in the form of a loan that reportedly ranks as the biggest of its kind on record. BNP Paribas SA and HSBC Plc will provide the rest of the financing.

Netflix is set to raise the debt in the form of bridge loans, short-term credit that companies quickly replace with long-term financing. Netflix is expected to swap up to $25 billion of the bridge financing with corporate bonds. It will substitute the rest with delayed-draw term loans and a $5 billion revolving credit facility.

Warner Bros. investors are set to receive $27.75 per share. The sum comprises $23.25 in cash and $4.501 worth of Netflix common stock. Paramount, one of the other bidders that sought to buy Warner Bros, offered $30 per share earlier this year. It sought to acquire the entire company rather than spin off its Global Networks business.

Netflix intends to make the films and TV shows that it will obtain through the deal available via its streaming service. Additionally, it plans to expand investments in the production of new content. Netflix stated that Warner Bros.’ studios will enable it to grow its production capacity in the U.S.

The streaming giant added that it will “optimize its plans for consumers, enhancing viewing options.” That suggests Netflix may be planning to launch new subscriptions using the acquired content. At the same time, the company has committed to continuing theatrical releases of Warner Bros. films.

“This acquisition will improve our offering and accelerate our business for decades to come,” said Netflix co-Chief Executive Officer Greg Peters.

The deal is likely to draw significant antitrust scrutiny given its size and potential impact on the entertainment industry. If the transaction fails to receive approval from regulators, Netflix will have to pay a $5.8 billion termination fee to Warner Bros. The streaming giant expects to close the acquisition after Warner Bros completes the spinoff of its Global Networks business in the third quarter of 2026.

Photo: Netflix