The streaming king "swallows" a century-old Hollywood studio: Netflix plans to acquire Warner Bros.'s film production business and HBO Max

Warner Bros. Discovery has entered into exclusive negotiations with Netflix, planning to sell its film studio and HBO Max streaming service. This deal will merge the world’s leading paid streaming platform with one of Hollywood’s oldest and most prestigious studios, bringing seismic change to the entertainment industry.

On Friday, Bloomberg reported that insiders revealed Netflix has proposed a $5 billion breakup fee clause; if regulators do not approve the deal, the fee will be paid to Warner Bros. Discovery. Both parties could announce the deal in the next few days if talks do not fall apart. This move shows Netflix has surpassed Paramount’s Skydance and Comcast, taking the lead in the bidding war.

Prior to completing the sale, Warner Bros. Discovery is valued at over $60 billion overall and will complete the divestment of its cable TV channels— including CNN, TBS, and TNT. This acquisition marks a major strategic shift for Netflix, as the streaming pioneer has never undertaken a deal on this scale before.

The deal has already triggered opposition in Washington. California Republican Congressman Darrell Issa sent a letter to U.S. regulators opposing any potential Netflix deal, saying it could harm consumer interests. Utah Republican Senator Mike Lee echoed these concerns this week.

Netflix’s Bid Leads Competitors

According to insiders, Netflix submitted an offer of $28 per share, outpacing Paramount’s Skydance’s bid for all of Warner Bros. Discovery’s assets— which ranged from $26 to $27 per share. Bloomberg Intelligence pointed out that Netflix’s $30 per share offer values Warner’s assets’ equity at $75 billion. The combined user base of roughly 450 million will trigger major antitrust concerns.

Paramount’s Skydance proposed an all-cash acquisition for the entire company, including the cable channels CNN and HBO, and promised that Warner Bros. Discovery CEO David Zaslav and the board would face no hurdles in U.S. regulatory approval.

Netflix’s offer is mainly cash, despite clear resistance from the Trump administration. Insiders say Zaslav has a close relationship with Netflix co-CEO Ted Sarandos, and Warner Bros. Discovery’s CEO may be willing to fight government attempts to block the Netflix deal in federal court.

Media giant Comcast also bid for Warner Bros. Discovery’s studio and streaming service, but its offer was a combination of cash and stock and appears to be the least competitive.

Paramount Launches Lobbying Offensive

On Wednesday, Paramount Skydance CEO David Ellison met Trump administration officials and key members of Congress in Washington, opposing Warner Bros. Discovery’s possible choice of Netflix as a merger partner. Ellison’s legal team is led by Makan Delrahim, head of antitrust at the Justice Department during the Trump era. Insiders say that in talks with Trump administration officials and lawmakers, they emphasized that Netflix’s bid to acquire Warner Bros. studio and HBO Max streaming service should be blocked on antitrust grounds.

This visit to Washington comes as Paramount Skydance grows increasingly pessimistic about its bid. Paramount’s senior management believes that despite the regulatory hurdles facing Netflix, Warner Bros. Discovery still prefers to reject its bid in favor of Netflix. In several letters this week, Paramount Skydance insinuated it may launch a hostile takeover of Warner Bros. Discovery, claiming that a Netflix deal poses unacceptable risks for Warner Bros. Discovery shareholders.

David Ellison, along with his father Larry Ellison— Oracle co-founder and billionaire— is trying to build a media empire through acquiring all of Warner Bros. Discovery’s assets, a deal that could cost $60 to $70 billion. What worries the Ellisons is that the Warner Bros. Discovery board may pick Netflix as the winner, even though Trump officials are concerned about Netflix’s suspected monopoly in streaming. After merging with HBO Max, Netflix would control 400 million streaming subscribers and a major studio.

Netflix Seeks Regulatory Approval

Netflix has hired veteran telecommunications lawyer Steve Sunshine to argue that the streaming giant will not have monopoly pricing power in streaming after acquiring Warner Bros. Discovery’s assets, citing the rise of program alternatives like YouTube and various forms of social media.

Paramount Skydance has sent at least two letters to the Warner Bros. Discovery board. One warned that the Netflix deal stands no chance of gaining regulatory approval from the Trump administration, and uncertainty in federal court could devalue its assets. The second, more sternly worded letter was sent when Warner Bros. Discovery requested another round of bidding.

The letter said Warner Bros. Discovery is "undertaking a short-sighted process predisposing the outcome to favor a single bidder." It accused senior officials involved in evaluating the bids of a conflict of interest, as they might gain positions in the merged entity if Netflix’s offer wins.

A Century-Old Giant Meets Streaming Titan

If concluded, the deal will make Netflix the owner of the HBO television network, which holds hit series such as "The Sopranos" and "The White Lotus." Warner Bros. assets also include a massive studio complex in Burbank, California, and a vast film and TV library— including "Harry Potter" and "Friends."

This acquisition marks a strategic shift for Netflix. Starting nearly thirty years ago as a DVD rental company by mail, Netflix recorded $39 billion in revenue in 2024, with a market cap of approximately $437 billion. Warner Bros., founded in the 1920s, has sales of over $39 billion. The streaming pioneer grew into Hollywood’s most valuable company without a content library or studio by licensing programs from others and expanding its own original content.

Warner Bros.’s signature content will provide Netflix with a powerful programming arsenal to maintain its lead over challengers like Disney and Paramount.

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