Netflix agrees to buy Warner Bros., creating a potential streaming titan

Harry Potter, Friends and Tom and Jerry may soon join Stranger Things, Squid Game and Bridgerton on Netflix, after the streamer on Friday agreed to a $82.7 billion deal to acquire Warner Bros., including its film and television studios, HBO and HBO Max.

The news follows weeks of intense speculation and dealmaking, with Paramount Skydance and Comcast also in the running. It caps a year that saw significant M&A activity in the media business as companies seek new sources of content and subscribers.

Netflix already boasts the world’s largest subscriber base. The deal would not only bring HBO Max’s subscribers into the fold, but also, arguably, the only other content library in the business that can compete with Disney’s in terms of cultural resonance around the world.

Netflix has committed to keeping the new Warner Bros. operationally separate and continuing to support its theatrical releases.

The transaction is expected to close in 12 to 18 months, after WBD concludes the planned spinoff of its cable television networks, including CNN and Discovery.

Given the size of the media giant that would emerge, the deal will likely be subject to substantial regulatory scrutiny in the U.S. and globally.

“I know some of your surprise that we’re making this acquisition, and I certainly understand why. Over the years, we have been known to be builders, not buyers,” Netflix co-CEO Ted Sarandos said on a conference call Friday, calling the acquisition “a rare opportunity.”

He continued: “In a world where people have so many choices, more choices than ever how to spend their time, we can’t stand still. We need to keep innovating and investing in stories that matter most to audiences, and that’s what this deal is all about.”

In the end, it was Netflix, not Paramount — the rights holder to The Godfather and erstwhile front-runner in the race to buy WBD — who just couldn’t pass on a deal too good to refuse.