Netflix’s pursuit of Warner Bros Discovery began as a routine fact-finding effort but ultimately escalated into one of the largest media acquisitions in a decade, a deal that people familiar with the matter told Reuters is poised to reshape the global entertainment industry.
Netflix announced Friday that it had secured a $72 billion agreement to buy Warner Bros Discovery, a move that came despite the streaming company’s public dismissal of such ambitions as recently as October. The shift began when Warner Bros Discovery launched an auction on October 21 after rejecting three unsolicited proposals from Paramount’s Skydance.
Interviews with seven advisers and executives reveal new details about how Netflix’s strategy evolved and how the Warner Bros board reached its decision. What started as casual interest in Warner Bros’ operations quickly transformed into a serious bid once Netflix executives recognized the long-term value of the studio’s deep library of films and television shows. According to one person familiar with the business, catalog titles can account for roughly 80% of viewing on streaming platforms, making Warner Bros’ century-old archive a powerful asset.
Beyond content, Netflix saw strategic benefits in Warner Bros’ theatrical distribution and promotional infrastructure, as well as the potential to boost the HBO Max streaming service with Netflix’s industry-shaping insights. Another source told Reuters that Netflix became more intrigued after Warner Bros Discovery announced plans in June to split into two publicly traded companies, separating its cash-generating cable networks from HBO, HBO Max, and the storied studio.
Competition for Warner Bros intensified in the fall, as Comcast and Paramount put forward rival proposals. Paramount submitted three escalating offers beginning in September, hoping to pre-empt the planned corporate split, which it believed would diminish its ability to combine television assets and make it more vulnerable to being outbid by Netflix.
Advisers also encouraged Warner Bros Discovery CEO David Zaslav to consider adjusting the order of the company’s planned spin-off, which could create more flexibility and open the door to selling studio and streaming assets expected to draw strong interest. As the December 1 bid deadline approached, Netflix and its advisers at Moelis & Company, Wells Fargo, and Skadden held daily morning calls for two months and continued working throughout Thanksgiving week.
Warner Bros’ board met every day during the final eight-day stretch leading up to Thursday’s decision. Netflix ultimately presented what sources described as the only bid deemed binding and complete. The board favored Netflix’s offer for its greater certainty and immediate benefits. Comcast had proposed merging NBCUniversal with Warner Bros Discovery to form a major competitor to Walt Disney, but sources said the complex transaction would have taken years to complete.
Paramount, meanwhile, raised its offer to $30 per share on Thursday, valuing Warner Bros Discovery at $78 billion. But sources said the board had doubts about Paramount’s ability to finance the deal. To strengthen its own position, Netflix offered a breakup fee of $5.8 billion—one of the largest ever in a merger agreement—signaling its confidence in clearing the regulatory review.
According to one person involved, “No one lights $6 billion on fire without that conviction.” Even so, Netflix executives reportedly believed they had only a 50-50 chance until late Thursday night, when news of the board’s acceptance triggered applause and cheers on a group call.
