To clear up some concerns. , Netflix said the deal will deliver more shows and movies to consumers, boost its long-term spending on U.S. production and original content, and create more jobs and opportunities for creative talent.
The company argued in the deal talks that combining its streaming service with HBO Max would benefit consumers.
According to media reports, the company has told Warner Bros. Discovery that it will continue to release the studio’s films in cinemas to ease fears that its deal would eliminate another studio and a major source of theatrical films.
Cash and stock deals
Under the deal, each Warner Bros. Discovery shareholder will receive $23.25 in cash and about $US4.50 per share in Netflix stock, valuing Warner at $US27.75 a share, or about $US72 billion and $US72 billion in equity and $US82.7 billion including debt.
The deal represents a premium of 121.3 percent to Warner Bros. Discovery’s closing price on Sept. 10, before initial reports of a potential buyout surfaced.
The deal is expected to close after Warner Bros. Discovery spins off its global networks unit, Discovery Global, into a separately listed company, which is now set for completion in the third quarter of 2026.
Netflix has offered Warner Bros. Discovery a breakup fee of $US5.8 billion, while Warner Bros. Discovery will pay Netflix $US2.8 billion if the deal ends.
Netflix said it expects to generate annual cost savings of at least $2 billion to $3 billion by the third year after the deal closes.
Netflix has growth problems
Analysts have said Netflix is driven by a desire to lock up long-term rights to hit shows and movies and rely less on outside studios as it expands into gaming and looks for new avenues of growth following the success of its password-sharing crackdown.
After surging more than 80 percent in 2024, its shares are up just 16 percent this year, as investors worry that its impairment rate may be lower, especially since it stopped disclosing consumer data earlier this year.
The company has leaned on its ad-supported tier to drive growth, but it is not expected to become a major revenue engine until next year, while analysts say its push into video games has stumbled amid strategy shifts and executive business.
Buying Warner Bros. would also deepen its gaming bet, as WBD is one of the few entertainment companies that has had major successes in the sector, including. Harry Potter Title The Hogwarts Legacywhich has generated more than $1 billion in revenue.
Reuters
