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

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

On Friday, Bloomberg reported that sources revealed Netflix proposed a $5 billion breakup fee, which would be paid to Warner Bros. Discovery if regulators do not approve the deal. The two parties could announce the transaction in the coming days, provided negotiations do not fall apart. This move indicates that Netflix has surpassed Paramount Skydance and Comcast, leading the bidding.

Before the sale is completed, Warner Bros. Discovery's overall valuation exceeds $60 billion, and it will complete the divestiture of its cable television channels, including CNN, TBS, and TNT. This acquisition marks a significant shift in Netflix's strategic direction, as the streaming pioneer has never engaged in a transaction of this scale.

The deal has sparked opposition in Washington. California Republican Congressman Darrell Issa wrote to U.S. regulators opposing any potential Netflix transaction, claiming it could harm consumer interests. Utah Republican Senator Mike Lee echoed this concern earlier this week.

Netflix's Bid Leads Competitors

According to insiders, Netflix's bid is $28 per share, surpassing Paramount Skydance's offer for all of Warner Bros. Discovery's assets, which ranged from $26 to $27 per share. Bloomberg Intelligence noted that Netflix's $30 per share offer implies an equity valuation of Warner's assets at $75 billion. The combined user base of approximately 450 million would raise significant antitrust concerns.

Paramount Skydance proposed an all-cash acquisition of the entire company, including the cable television channels CNN and HBO, and assured that Warner Bros. Discovery CEO David Zaslav and the board would have a smooth path through U.S. regulatory approval.

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

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

Paramount Launches Lobbying Efforts

Paramount Skydance CEO David Ellison met with Trump administration officials and key congressional members in Washington on Wednesday to oppose Warner Bros. Discovery potentially choosing Netflix as a merger partner. Ellison's legal team is led by Makan Delrahim, the former head of antitrust at the Justice Department during the Trump administration. Insiders said they emphasized in discussions with Trump administration officials and lawmakers that Netflix's proposed acquisition of Warner Bros. studio and HBO Max streaming service should be blocked on antitrust grounds This trip to Washington coincides with Paramount Skydance's increasingly pessimistic bidding situation. Paramount's senior management believes that despite regulatory hurdles facing Netflix, Warner Bros. Discovery is still inclined to reject its offer in favor of Netflix. Paramount Skydance hinted in multiple letters this week that it might launch a hostile takeover of Warner Bros. Discovery, stating that the Netflix deal poses unacceptable risks to Warner Bros. Discovery's shareholders.

David Ellison and his father, Oracle co-founder and billionaire Larry Ellison, are attempting to build a media empire by acquiring all of Warner Bros. Discovery's assets, a deal that could cost between $60 billion and $70 billion. What worries the Ellisons is that Warner Bros. Discovery's board may choose Netflix as the winner, despite concerns from Trump administration officials about Netflix's alleged monopoly in the streaming space. After merging with HBO Max, Netflix would control 400 million streaming subscribers and a major production studio.

Netflix Seeks Regulatory Green Light

Netflix has hired veteran telecom lawyer Steve Sunshine to argue that the streaming giant would not gain monopolistic pricing power in the streaming space after acquiring Warner Bros. Discovery's assets, citing the rise of substitutes like YouTube and various forms of social media.

Paramount Skydance sent at least two letters to Warner Bros. Discovery's board. One warned the company that the Netflix deal has no chance of receiving regulatory approval from the Trump administration, and the uncertainty from federal courts could devalue its assets. The second, more strongly worded letter was sent when Warner Bros. Discovery requested a new round of bidding.

The letter stated that Warner Bros. Discovery "is taking a short-sighted process, pre-setting outcomes to favor a single bidder." The letter accused senior officials involved in evaluating bids of having conflicts of interest, as they might secure positions in the merged entity if Netflix wins.

A Century-Old Company Meets a Streaming Giant

If this deal goes through, it would make Netflix the owner of the HBO television network, which has popular series like "The Sopranos" and "The White Lotus." Warner Bros.' assets also include a large production studio located in Burbank, California, and a vast film and television archive that includes works like "Harry Potter" and "Friends."

This acquisition marks a strategic shift for Netflix. Founded nearly thirty years ago as a DVD rental company by mail, Netflix is projected to generate $39 billion in revenue in 2024, with a market value of approximately $437 billion. Warner Bros., established in the 1920s, has sales exceeding $39 billion. This streaming pioneer has grown into Hollywood's most valuable company by licensing programs from others and expanding original content without a content library or production studio.

Warner Bros.' iconic content would provide Netflix with a strong programming resource to maintain its lead over challengers like Walt Disney and Paramount