BY Fraser Tennant
In what would be a game-changing deal for Hollywood’s biggest studios, US streaming service Netflix agreed to acquire global media and entertainment company Warner Bros. Discovery’s (WBD’s) TV, film studios and streaming division in a deal valued at $72bn.
Under the terms of the definitive agreement, WBD shareholders will receive $23.25 in cash and $4.501 in shares of Netflix common stock for each share of WBD common stock outstanding at the closing of the transaction. The transaction values Warner Bros. Discovery at $27.75 per share.
The acquisition would bring together two pioneering entertainment businesses, combining Netflix’s innovation, global reach and best in class streaming service with WBD’s century-long legacy of world class storytelling.
Through adding WBD’s extensive film and TV libraries and HBO and HBO Max programming, Netflix members will have even more high-quality titles from which to choose – allowing Netflix to optimise its plans for consumers, enhancing viewing options and expanding access to content.
The deal will also enhance Netflix’s studio capabilities, allowing the company to significantly expand US production capacity and continue to grow investment in original content over the long term, creating jobs and strengthening the entertainment industry.
“Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities,” said Greg Peters, co-chief executive of Netflix. “With our global reach and proven business model, we can introduce a broader audience to the worlds they create – giving our members more options, attracting more fans to our best in class streaming service, strengthening the entire entertainment industry and creating more value for shareholders.”
The transaction was unanimously approved by the boards of directors of both Netflix and WBD.
“This transaction combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most,” said David Zaslav, president and chief executive of WBD. “For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention and shaped our culture. By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
The transaction is expected to close in 12-18 months, subject to required regulatory approvals, approval of WBD shareholders and other customary closing conditions.
“Our mission has always been to entertain the world,” noted Ted Sarandos, co-chief executive of Netflix. “This acquisition will improve our offering and accelerate our business for decades to come.”
However, on Monday 08 December the Netflix-WBD transaction was thrown into uncertainty as Paramount responded with a $108.4bn hostile bid. It announced an all-cash tender offer to acquire all of the outstanding shares of WBD for $30 per share. Paramount’s proposed transaction is for the entirety of WBD, including the Global Networks segment, and would provide shareholders $18bn more in cash than the Netflix consideration, according to the company.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” said David Ellison, chairman and chief executive of Paramount. “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
News: Netflix to buy Warner Bros Discovery’s studios, streaming unit for $72 billion