Netflix dropped an early Friday-morning bomb when it announced it had purchased parts of Warner Bros. Discovery, which could shake Hollywood for the foreseeable future.
The intense bidding war that saw other giants like Paramount, Skydance, and Comcast trying to get their hands on the legacy assets is now over.
Both companies revealed that the deal is comprised of cash and stock and valued at $27.75 per WBD share, putting the equity value of the agreement at a mind-blowing $72 billion with a total enterprise value of approximately $82.7 billion.
When it’s all said and done, Netflix will own Warner Bros.′ film studio and streaming service, HBO Max.
Warner Bros. will still move forward with its plans to roll out Discovery Global, which comprises its portfolio of pay TV assets, including TNT and CNN.
Netflix, which is already home to numerous popular properties like Stranger Things, will now include HBO Max series like The Sopranos and Game of Thrones, as well as other iconic Warner Bros. properties like The Wizard of Oz, Harry Potter, and James Gunn’s DC Comics Cinematic Universe.
During an investor call on Friday following the announcement of the deal, Netflix co-CEO Ted Sarandos said, “I know some of you’re surprised that we’re making this acquisition, and I certainly understand why. Over the years, we have been known to be builders, not buyers.”
“We already have incredible shows and movies and a great business model, and it’s working for talent, it’s working for consumers, and it’s working for shareholders. This is a rare opportunity,” he continued. “It’s going to help us achieve our mission to entertain the world and to bring people together through great stories.”
Other Details About The Netflix x Warner Bros. Deal
According to CNBC, every Warner Bros. Discovery shareholder will receive $23.25 in cash and $4.50 in shares of Netflix common stock for each share of WBD common stock.
Netflix and Warner Bros. Discovery both announced that their boards unanimously approved the deal, which is still subject to regulatory and shareholder approvals.
Suppose by chance the deal does not get finalized. In that case, Netflix has agreed to pay a $5.8 billion reverse breakup fee, and Warner Bros. will pay a $2.8 billion breakup fee, according to a Securities and Exchange Commission filing.
The reaction to the $72 billion deal isn’t going over so well. Social media sees this as another giant merger that will eventually lead to them dishing out more money to use Netflix’s service.
Others think this deal will further doom the movie-going experience, with reports already surfacing of Warner Bros. films likely to have even shorter stints in theaters.
Damn.
You can see more reactions below.
