Netflix stock sinks as the streaming giant reveals plans to buy Warner Bros. and HBO in $83 billion mega-deal

Netflix has announced that it intends to buy legendary Hollywood studio Warner Bros. in a deal valued at approximately $82.7 billion.

The deal, which must be approved by regulators, will further consolidate the entertainment industry and give Netflix ownership of some of the most iconic films and television franchises ever, not to mention HBO.

Here’s what you need to know:

What’s happened?

Today, Netflix and Warner Bros announced a deal in which Netflix will purchase the legendary Hollywood studio, along with its HBO Max and HBO divisions, for a total enterprise value of approximately $82.7 billion (which Netflix says has an equity value of $72.0 billion).

The deal isn’t exactly a surprise, as Warner Bros had previously put itself up for sale publicly and Netflix was expected to be one of the primary bidders for the company’s assets. However, the deal marks a major milestone for the streaming giant, which is not known for large-scale acquisitions.

The news comes after Warner Bros. Discovery, the company’s owner, announced this summer that it would split the current company into two, with the new ones owning its Streaming & Studios assets and Global Networks divisions, respectively.

With today’s announcement, Netflix is essentially buying the “Streaming & Studios” company that will spin off from Warner Bros. Discovery next year.

When the deal closes, Netflix says each WBD shareholder will receive $23.25 in cash as well as $4.50 in shares of Netflix common stock for every share of WBD common stock they own.

Announcing the deal, Greg Peters, co-CEO of Netflix, said, “With our global reach and proven business model, we can introduce a broader audience to the worlds —giving our members more options, attracting more fans to our best-in-class streaming service, strengthening the entire entertainment industry and creating more value for shareholders.”

What IP will Netflix acquire under the deal?

Netflix’s purchase deal for Warner Bros, HBO Max, and HBO will give the streaming giant ownership over one of the most lucrative intellectual property portfolios out there.

If the deal closes, Netflix will own:

• DC Universe
• Batman
• Superman
• Wonder Woman
• Friends
• Game of Thrones
• The Big Bang Theory
• The Harry Potter film franchise

Touching on the IP aspect of the deal, Ted Sarandos, co-CEO of Netflix, said, “Our mission has always been to entertain the world. By combining Warner Bros.’ 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.”

What has Warner Bros said about the deal?

In a statement, David Zaslav, president and CEO of Warner Bros. Discovery, said, “Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most.”

When does the Netflix-Warner Bros deal close?

Netflix says that it expects the transaction to close in the next 12-18 months, putting a likely closing date sometime in 2027.

However, Netflix and Warner Bros can likely expect extreme regulatory scrutiny of their deal. While Netflix’s and WBD’s boards of directors unanimously approved the deal, it will not be finalized until regulators give the go-ahead.

How have the companies’ stock prices reacted?

Shares in Netflix Inc. (Nasdaq: NFLX) fell in premarket trading on Friday. As of this writing, Netflix stock is down just over 4%.

Shares in Warner Bros. Discovery, Inc. (Nasdaq: WBD) were essentially flat in premarket trading as of this writing.