What started as a fact-finding mission for Netflix culminated in one of the biggest media deals in the last decade and one that stands to reshape the global entertainment business landscape.
Netflix announced on Friday it had reached a deal to buy Warner Bros Discovery’s TV, film studios and streaming division for US$72-billion, excluding debt.
Although Netflix had publicly downplayed speculation about buying a major Hollywood studio as recently as October, the streaming pioneer threw its hat in the ring when Warner Bros Discovery kicked off an auction on 21 October, after rejecting a trio of unsolicited offers from Paramount Skydance.
Details of Netflix’s plan and the Warner Bros board’s deliberations, based on interviews with seven advisers and executives, are reported here for the first time.
Initially motivated by curiosity about its business, Netflix executives quickly recognised the opportunity presented by Warner Bros, beyond the ability to offer the century-old studio’s deep catalogue of movies and television shows to Netflix subscribers. Library titles are valuable to streaming services as these movies and shows can account for 80% of viewing, according to one person familiar with the business.
Warner Bros’ business units — particularly its theatrical distribution and promotion unit and its studio — were complementary to Netflix. The HBO Max streaming service also would benefit from insights learnt years ago by streaming leader Netflix that would accelerate HBO’s growth, according to one person familiar with the situation.
Public auction
Netflix began flirting with the idea of acquiring the studio and streaming assets, another source familiar with the process said, after WBD announced plans in June to split into two publicly traded companies, separating its fading but cash-generating cable television networks from the legendary Warner Bros studios, HBO and the HBO Max streaming service.
Netflix and Warner Bros did not reply to requests for comment.
The work intensified in the northern hemisphere autumn, as Netflix began vying for the assets against Paramount and NBCUniversal’s parent company, Comcast.
Read: Netflix, Warner Bros deal raises fresh headaches for MultiChoice
Warner Bros kicked off the public auction in October, after Paramount submitted the first of three escalating offers for the media company in September. Sources familiar with the offer said Paramount aimed to preempt the planned separation because the split would undercut its ability to combine the traditional television networks businesses and increase the risk of being outbid for the studio by the likes of Netflix.
Around that time, banker JPMorgan Chase & Co was advising Warner Bros Discovery CEO David Zaslav to consider reversing the order of the planned spin, shedding the Discovery Global unit comprising the company’s cable television assets first. This would give the company more flexibility, including the option to sell the studio, streaming and content assets, which advisers believed would draw strong interest, according to sources familiar with the matter.
Executives for the streaming service and its advisory team, which included the investment banks Moelis & Company, Wells Fargo and the law firm Skadden, Arps, Slate, Meagher & Flom, had been holding daily morning calls for the past two months, sources said. The group worked throughout Thanksgiving week — including multiple calls on Thanksgiving Day — to prepare a bid by the 1 December deadline.
Warner Bros’ board similarly convened every day for the last eight days leading up to the decision on Thursday, when Netflix presented the final offer that sources described as the only offer they considered binding and complete, sources familiar with the deliberations said.
The board favoured Netflix’s deal, which would yield more immediate benefits over one by Comcast. The NBCUniversal parent proposed merging its entertainment division with Warner Bros Discovery, creating a much larger unit that would rival Walt Disney. But it would have taken years to execute, the sources said. Comcast declined to comment.
Although Paramount raised its offer to $30/share on Thursday for the entire company, for an equity value of $78-billion, according to sources familiar with the deal, the Warner Bros board had concerns about the financing, other sources said. Paramount declined comment.
To reassure the seller over what is expected to be a significant regulatory review, Netflix put forward one of the largest breakup fees in M&A history of $5.8-billion, a sign of its belief it would win regulatory approval, the sources said. “No one lights $6-billion on fire without that conviction,” one of the sources said.
Read: Netflix to buy Warner Bros Discovery in industry-defining megadeal
Until the moment late on Thursday night when Netflix learnt its offer had been accepted — news that was greeted by clapping and cheering on a group call — one Netflix executive confided that they thought they had only a 50-50 chance. — Dawn Chmielewski and Milana Vinn, (c) 2025 Reuters
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