Netflix on December 5 effectively agreed to acquire Warner Bros. Discovery’s TV, film studios and streaming division. The deal, which would transfer the control of one of Hollywood’s most prized and oldest assets to Netflix, is valued at $72 billion.
The deal follows a bidding war which has been going on for weeks together and in which Netflix offered almost $28 a share. Paramount Skydance’s offer was close to $24.
After the deal is signed, sealed and delivered, it will tilt the balance of power in Hollywood in favour of Netflix, which is already the market leader among streaming platforms. According to CEO Ted Sarandos, the two companies together will “help define the next century of storytelling”.
The deal is expected to close after Warner carves out the cable unit, which is likely to happen by the third quarter next year. Warner has a 100-year-old library. It also controls MGM classics.
Under the deal, each Warner Bros. Discovery shareholder will receive $23.25 in cash and about $4.50 in Netflix stock per share. This puts a value of $27.75 per share of Warner, or about $72 billion in equity and $82.7 billion including debt.