What began as a fact-finding mission for Netflix has evolved into one of the most significant media deals of the last decade, poised to reshape the global entertainment industry. On Friday, Netflix announced it had finalized an agreement to acquire Warner Bros. Discovery’s television, film studios, and streaming division for an astounding $72 billion.
Though Netflix previously downplayed speculation about acquiring a prominent Hollywood studio, it entered the bidding when Warner Bros. Discovery initiated an auction on October 21, rejecting multiple unsolicited offers from Paramount Skydance.
This article reveals details of Netflix’s strategy and Warner Bros. board’s discussions, based on insights from seven advisors and executives involved in the negotiations. Initially driven by curiosity, Netflix executives quickly identified the robust opportunity presented by Warner Bros. Beyond gaining access to the century-old studio’s expansive catalog of films and television shows, Netflix recognized that library titles are crucial to streaming services, often accounting for 80% of total viewership.
Warner Bros.’ business units, particularly its theatrical distribution and promotion sectors, complemented Netflix’s operations. The HBO Max streaming service would also benefit from Netflix’s years of experience, potentially accelerating HBO’s growth.
Netflix began considering the acquisition of Warner Bros. after WBD announced in June its plans to split into two publicly traded entities, separating its declining but profitable cable networks from the storied Warner Bros. studios and its streaming platform.
As the bidding intensified this autumn, Netflix faced competition from Paramount and Comcast, the parent company of NBCUniversal. Warner Bros. launched a public auction in October after Paramount made the first of three increasing offers in September. Sources close to the matter indicated that Paramount’s goal was to preempt the planned separation, fearing it would weaken their position to merge traditional television network businesses and increase the risk of being outbid by Netflix.
Around this period, JPMorgan Chase & Co. was advising Warner Bros. Discovery CEO David Zaslav to reconsider the sequence of the planned split, suggesting that shedding the Discovery Global unit of cable assets first could enhance flexibility, making it easier to sell streaming and content assets that were expected to attract substantial interest.
Executives at Netflix, supported by investment banks Moelis & Company, Wells Fargo, and the law firm Skadden, Arps, Slate, Meagher & Flom, maintained daily calls in the lead-up to finalizing their bid, even working through Thanksgiving week to meet the December 1 deadline.
In the last eight days leading to the decision, Warner Bros.’ board convened daily, ultimately favoring Netflix’s offer, which presented more immediate advantages than Comcast’s. Comcast had proposed merging its entertainment division with Warner Bros. Discovery, creating a larger entity that could rival Disney, albeit with a lengthy execution timeline.
As Paramount raised its offer to $30 per share on Thursday, equating to an equity valuation of $78 billion, Warner Bros. executives expressed concerns regarding the financing of this proposal.
To alleviate worries about the anticipated rigorous regulatory review, Netflix set forth one of the largest breakup fees in merger and acquisition history at $5.8 billion, indicating its confidence in securing regulatory approval.
When Netflix learned late Thursday night that its offer had been accepted, the announcement was met with celebration among the team. Despite the excitement, one executive expressed uncertainty before the deal’s confirmation, stating they perceived their chances of success as only 50-50.
Original Source: https://indianexpress.com/article/technology/how-netflix-won-hollywoods-biggest-prize-warner-bros-discovery-10405271/
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Publish Date: 2025-12-06 08:17:00
