Netflix buys Warner Bros. Discovery in deal valued at $83 billion

Netflix acquiring one of its foremost entertainment rivals? Stranger things have happened.

The largest subscription streaming service in the world is set to acquire Warner Bros. Discovery’s film and TV studio, streaming business (including HBO Max), and HBO, in a deal valued at $82.7 billion, it announced Friday morning.

The deal, which is expected to close sometime after the third quarter of 2026, is set to create a Hollywood Goliath and will bring lucrative entertainment franchises under one roof as Netflix looks to continue to cement itself as a must-have subscription, build out its advertising business, and engage consumers through consumer products and IRL experiences.

“Our mission has always been to entertain the world,” Ted Sarandos, co-CEO of Netflix, said in a statement. “By combining Warner Bros.’s incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters, and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”

The megadeal comes as part of a larger split of Warner Bros. Discovery, which, after combining in 2022, announced plans to cleave its streaming and studio operations from its linear TV business, setting off a bidding war. Netflix was not the only interested party: Paramount Skydance, itself fresh off of a controversial merger, had also thrown its hat in the ring, as did Comcast, which owns NBCUniversal and its streaming service Peacock.

In a call with Wall Street analysts Friday, Sarandos noted that the deal marked something of a new era for Netflix, which has, unlike other entertainment giants like Disney, made only small acquisitions over the years. Just last month, Sarandos told investors that the company was “predominantly focused on growing organically” after fielding a question about acquisition rumors.

“Over the years, we have been known to be builders, not buyers,” Sarandos said on the call this morning. “We already have incredible shows and movies and a great business model, and it’s working for talent, it’s working for consumers and it’s working for shareholders, 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.”

Subscribe here: Any combination is set to immediately boost Netflix’s total subscriber count, which it announced earlier this year had cleared 300 million (although the streamer has stopped breaking out subscriber counts every quarter). WBD, meanwhile, last reported that it had a total of 128 million global streaming subscribers, up 16% year over year, and told investors it was “on a clear path towards at least 150 million streaming subscribers by the end of 2026.” (That count includes HBO Max, by far its largest streamer, along with Discovery+ and other more niche services.)

If the deal goes through, it’s unclear exactly how Netflix could bring HBO Max into its own fold and how consumers might access both services in the future, but Netflix said in its announcement that the acquisition will allow it “to optimize its plans for consumers.” It’s possible that Netflix could bundle the services, like rival Disney does with its own standalone offerings.

Not bad, ads: The deal is poised to create a streaming advertising behemoth. Netflix has been steadily building out its advertising platform since it first debuted in November 2022 and last reported 94 million monthly active users on its ads tier worldwide. Last quarter, the streamer said it was on track to more than double its revenue from advertising.

WBD has also been steadily building out advertising on HBO Max, including with new ad formats and higher ad loads. Last month, the company reported that its total streaming advertising revenue increased 14%, which was primarily driven by an increase in subscribers to its ad-supported tier; those gains, though, were overshadowed by steep declines to the company’s linear TV business.

Close the curtains? Netflix executives have pooh-poohed traditional theatrical releases, with Sarandos recently saying that the model is “outmoded,” which has already led to plenty of concern among those committed to the moviegoing business. For now, the company said that it “expects to maintain Warner Bros.’s current operations and build on its strengths, including theatrical releases for films.”

Combine and conquer: Late last month, HBO CEO Casey Bloys, whose fate at the combined company is unclear, said during a press event that Netflix has “become a utility for consumers,” but noted that he believed there was still room in the market for stand-out programming options to complement it.

“[Netflix] is the basic cable of today, and in today’s world, consumers still want to add to their entertainment portfolio with must-have, truly unique programming that only we can deliver,” he said.