Netflix says the buy would give users more choice and let it “optimize its plans,” it will also expand its studio operations, while creating better value for talent and shareholders, with $2 billion-$3 billion in annual cost savings. The deal proposal has a break up fee of $5.8 billion, meaning that if the acquisition is scuttled in any way Netflix still has to pay those billions.

The companies revealed the acquisition early Friday, altering the course of the entertainment business. Netflix said that it expects to maintain the current operations of Warner Bros. “including theatrical releases for films,” though specifics aside from topline deal numbers remain scarce. And that may be the focus of opposition to the acquisition as the dust settles on the announcement.

Netflix also made its pitch to filmmakers and creatives, writing that “by uniting Netflix’s member experience and global reach with Warner Bros.’ renowned franchises and extensive library, the Company will create greater value for talent — offering more opportunities to work with beloved intellectual property, tell new stories and connect with a wider audience than ever before.”

WBD shareholders will receive $23.25 in cash and $4.50 in shares of Netflix common stock for each share of WBD common stock, with the linear networks business, including CNN, TNT HGTV and Discovery+ still set to be spun out. That move is now expected in the third quarter of 2026.

“This acquisition will improve our offering and accelerate our business for decades to come,” continued Greg Peters, co-CEO of Netflix. “Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create—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.”

Netflix arguably emerged as the winner of the “Streaming Wars.” And now, it is at the Hollywood gates and ready for its latest conquest, even if it is expected to face heavy regulatory scrutiny. The news came after reports that it was in exclusive talksm with Warner Bros. Discovery to acquire its streaming and studios business.

Wall Street analysts have already previewed the logic of the deal. “Above all, the flow of new content which drives the majority of Netflix engagement,” Wolfe Research analyst Peter Supino wrote in a recent report. “Content released in the last year makes up only about 5 percent of the titles on Netflix but drives over 20 percent of Netflix viewing, reflecting that Netflix engagement increases/ decreases when content spend goes up/down.

Bank of America analyst Jessica Reif Ehrlich described the auction of WBD this way: “The global media industry stands at the precipice of historic transformation, with WBD positioned at the epicenter.”

And she argued that Netflix sealing a deal for WBD’s studios and streaming operations would allow it to kill three birds with one stone. “The bidding war for WBD’s streaming and studio assets reflects the economic reality of the 2025 media environment that mid-sized legacy media studios/companies can no longer compete with the unit economics of Netflix or the ecosystem of large tech players, such as Amazon,” she explained. “Ultimately, an acquisition may be existential for both Paramount Skydance and [Comcast’s] NBCUniversal, and therefore, aside from potential direct financial benefits, an acquisition by Netflix could potentially be killing three birds with one stone – as WBD would be housed within Netflix and Paramount Skydance and NBCU/Peacock would, in our view, have difficulty remaining competitive.”

Morgan Stanley analyst Benjamin Swinburne has previously also highlighted the intellectual property that Netflix would get its hands on in a WBD deal: “Perhaps most interesting to Netflix, it owns or has exclusive rights to several iconic franchises that could be exploited for decades to come – including DC Comics, Harry Potter, and Lord of the Rings. Finally, it brings talent relationships, production assets, and global distribution scale.”

The biggest hurdle for a Netflix-WBD combination is widely seen as being regulatory concerns. But that is more of a headache for the streamer rather than WBD.

Many in Hollywood are fearful of the deal, with theater owners group Cinema United saying in a statement overnight that “the proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business.”

“The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world,” Cinema United president and CEO Michael O’Leary said. “Cinema United stands ready to support industry changes that lead to increased movie production and give consumers more opportunities to enjoy a day at the local theatre. But Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite. Regulators must look closely at the specifics of this proposed transaction and understand the negative impact it will have on consumers, exhibition and the entertainment industry.”

Now Hollywood will have to take stock of a megadeal that promises to change the landscape in a way that no deal before it has.