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Netflix has agreed to buy Warner Bros Discovery in an $82.7bn (£62bn) deal that will dramatically reshape the established Hollywood film and TV industry.
The streaming company will take control of prize assets including Warner Bros, the studio behind franchises including Harry Potter, Superman and Batman, as well as HBO, home to shows including Game of Thrones, The White Lotus and Succession.
Netflix will also get hold of an extensive TV archive that includes classics such as Friends, which is scheduled to be removed from Netflix at the end of the year, and The Big Bang Theory.
“Our mission has always been to entertain the world,” said Ted Sarandos, the co-chief executive of Netflix. “Together, we can give audiences more of what they love and help define the next century of storytelling.”
The deal, which values WBD at $72bn excluding debt, will close after WBD spins-off its cable channels, which include CNN, TBS and TNT, which is expected to be completed in the third quarter next year.
Netflix, which has offered a $5bn breakup fee if the deal fails to gain regulatory clearance, had been in competition with Paramount Skydance and Comcast, which owns assets including Universal Studios and Sky.
Netflix said it expects to make at least $2bn to $3bn in annual savings by the third year after the deal closes.
Analysts have warned that the deal could spark competition concerns as it would result in the combination of two of the biggest streaming services in the US.
Netflix has given assurances that it will continue to allow the Warner Bros film studio to continue to have wide cinematic releases.
“However, significant concerns remain within the industry and among government officials,” said Alicia Reese, a media and entertainment analyst at Wedbush. “Should the exclusive negotiations with Netflix lead to a proposed sale, the regulatory process would be lengthy and difficult and may ultimately block the sale without clear assurances from the studio side.”
WBD has already negotiated its theatrical release slate through until the end of 2029, so any buyer would at the least have to honour those obligations until they come up for renewal.
“For more than a century Warner Bros has thrilled audiences,” said David Zaslav, the chief executive of WBD. “By coming together with Netflix, we will ensure people everyehere will continue to enjoy the world’s most resonant stories for generations to come.”
Warner Bros formally put itself up for sale in October after receiving interest from several parties.
Earlier this week, James Cameron, the director of Titanic and the Terminator and Avatar series, warned that a sale to Netflix would cause a “catastrophic loss of long-term value” for the entertainment industry.
Paramount, run by David Ellison and bankrolled by his billionaire father and Oracle founder, Larry, had been seen as the early frontrunner.
Paramount, which owns assets including Channel 5 in the UK, had also offered a $5bn termination fee if a deal is agreed but fails to get regulatory clearance.
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Earlier this week, Paramount argued in a letter to Warner Bros that its bid was most likely to gain regulatory clearance.
Paramount accused Warner Bros of operating an unfair auction process that favoured Netflix.
In the letter from litigation counsel the company called the process “tainted” because of conflicts at WBD, including some executives seeking roles after a deal closes.
The letter, to Zaslav, said that the company was not following “the semblance and reality of a fair transaction process”, calling it “myopic … with a predetermined outcome that favours a single bidder”.
Paramount, which began its pursuit of WBD months after the completion of its $8.4bn takeover by Ellison’s Skydance and its investment partner RedBird Capital, is seeking to buy the entire company including the cable networks such as CNN.
Donald Trump reportedly would prefer Paramount to triumph as he likes the idea of CNN and CBS being controlled by the Ellisons.
After the completion of the takeover, Paramount Skydance appointed a Trump ally as ombudsman at CBS News and acquired “anti-woke” startup The Free Press, subsequently naming its founder, Bari Weiss, as editor-in-chief of the US news network.
Warner Bros, Netflix, Comcast and Paramount declined to comment.
