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NEW YORK \u2014 Netflix has struck a deal with Warner Bros. Discovery, the legacy Hollywood giant behind \u201cHarry Potter\u201d and \u201cFriends,\u201d to buy its studio and streaming business for $72 billion.<\/p>\n
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<\/div>\n The acquisition would bring two of the industry\u2019s biggest players in film and TV under one roof and alter the entertainment industry landscape. Beyond its namesake television and motion picture division, Warner owns HBO Max and DC Studios. And Netflix is ubiquitous with on-demand content and has built its own production arm to release popular titles, including \u201cStranger Things\u201d and \u201cSquid Game.\u201d<\/p>\n \u201cFor more than a century, Warner Bros. has thrilled audiences, captured the world\u2019s attention, and shaped our culture,” David Zaslav, CEO of Warner Bros. Discovery, said in a statement Friday. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world\u2019s most resonant stories for generations to come.\u201d<\/p>\n The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of approximately $82.7 billion. The transaction is expected to close in the next 12 to 18 months \u2014 after Warner completes its previously-announced separation of its cable operations. Not included in the deal are networks like celebrity.land and Discovery.<\/p>\n The bid will draw tremendous antitrust scrutiny. Beyond TV and movie production, the merger would bring two of the streaming world\u2019s biggest names \u2014 Netflix and HBO Max \u2014 under the same ownership.<\/p>\n If the transaction goes through, Netflix \u201cwill cement itself as the Goliath of streaming,\u201d said Mike Proulx, a VP research director at Forrester. “This deal changes the calculus of the streaming wars, representing a seismic shift in the entertainment industry.\u201d<\/p>\n What the future of both Netflix and HBO Max will look like has yet to be seen. But if the two platforms remain separate subscriptions, users may encounter more \u201cbundle\u201d promotions \u2014 and boost content libraries more broadly. Netflix on Friday said that the addition of HBO and HBO Max programming will give its members \u201ceven more high-quality titles from which to choose\u201d and \u201coptimize its plans for consumers.\u201d<\/p>\n Still, some warn that consolidation across the industry will mean less variety of content \u2014 and fewer choices for consumers down the road.<\/p>\n Gaining Warner\u2019s 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\u2019s studio films \u2014 honoring Warner\u2019s contractual agreements for movie releases.<\/p>\n Netflix has kept most of its original content within its core online platform. But there\u2019s been exceptions, including qualifying runs for its awards contenders, including this year\u2019s\u00a0\u201cFrankenstein,\u201d<\/a>\u00a0limited theater screenings of a \u201cKPop Demon Hunters\u201d sing-a-long and its coming \u201cStranger Things\u201d series finale. Though\u00a0the streaming company<\/a>\u00a0has a policy of not reporting ticket sales, \u201cKPop Demon Hunters\u201d\u00a0unofficially topped the box office<\/a>\u00a0in late August taking in nearly $20 million.<\/p>\n \u201cOur mission has always been to entertain the world,\u201d Ted Sarandos, co-CEO of Netflix said in a statement \u2014 adding that merging with Warner will \u201cgive audiences more of what they love.\u201d<\/p>\n Critics say a Netflix-Warner combo would be bad news for people who love to go to movie theaters and for those who work in them. Cinema United \u2014 a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally \u2014 was quick to oppose the proposed deal, which it said \u201cposes an unprecedented threat to the global exhibition business.\u201d<\/p>\n \u201cNetflix\u2019s stated business model does not support theatrical exhibition. In fact, it is the opposite,\u201d Michael O\u2019Leary, CEO of Cinema United, said Friday \u2014 urging regulators to look closely at the impacts. “Theatres will close, communities will suffer, jobs will be lost.\u201d<\/p>\n Netflix had previously avoided venturing into other parts of the legacy entertainment landscape. As recently as October \u2014 when Warner signaled that it was\u00a0open to a potential sale of its business<\/a>\u00a0\u2014 Netflix’s Sarandos reiterated on an earnings call that the company had been \u201cvery clear in the past that we have no interest in owning legacy media networks\u201d and that there was \u201cno change there.\u201d<\/p>\n \u201cWe believe that we can be and we will be choosy,\u201d Sarandos\u00a0said at the time<\/a>, without fully ruling out a potential bid for Warner.<\/p>\n