Netflix to acquire Warner Bros. studio and streaming business for $72 billion

NEW YORK (AP) — Netflix struck a deal Friday to buy Warner Bros. Discovery, the Hollywood giant behind “Harry Potter” and HBO Max, in a $72 billion deal that would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.

If approved by regulators, the merger would put two of the world’s biggest streaming services under the same ownership — and join Warner's television and motion picture division, including DC Studios, with Netflix's vast library and its production arm, which has released popular titles such as “Stranger Things” and “Squid Game.”

The proposal could draw intense antitrust scrutiny, particularly for its effects on movie making and streaming subscriptions.

“Netflix is the top streaming service today. Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry,” said Mike Proulx, vice president and research director at Forrester, a market research company.

The cash and stock deal is valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt. The transaction is expected to close in the next 12 to 18 months, after Warner completes its previously announced separation of its cable operations. Not included in the deal are networks such as CNN and Discovery.

One of the big unanswered questions, Proulx added, is whether HBO Max and Netflix would “stay as separate streaming services or combine into a mega streaming service."

But either way, he said, customers could see some price relief in the form of a single subscription bill or bundle promotions, which would be a welcome change as streaming prices continue to rise and consumers feel the pinch of paying for multiple services.

Of course, that all depends on whether the deal goes through. Netflix on Friday maintained that the addition of HBO and HBO Max programming will give its members “even more high-quality titles" and “optimize its plans for consumers.”

Others warned that a Netflix-Warner combo could create an even bigger entertainment titan with ramifications for both consumers and people working across the film and TV industry. Critics said the consequences could include job losses and a reduced variety of content.

Gaining Warner’s legacy studios would mark a notable shift for Netflix, particularly its presence in theaters. Under the proposed acquisition, Netflix has promised to continue theatrical releases for Warner’s studio films, honoring Warner’s contractual agreements.

Netflix has kept most of its original content within its core online platform. But there have been exceptions, including qualifying runs for its awards contenders, including this year’s “Frankenstein,” limited theater screenings of a “KPop Demon Hunters” sing-a-long and its coming “Stranger Things” series finale.

“Our mission has always been to entertain the world,” Ted Sarandos, co-CEO of Netflix, said in a statement, adding that merging with Warner will “give audiences more of what they love.”

David Zaslav, CEO of Warner Bros. Discovery, added that merging with Netflix “will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”

Critics said a Netflix-Warner combo would be bad news for moviegoers and for people who work in theaters. Cinema United — a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally — was quick to oppose the deal, which it said “poses an unprecedented threat to the global exhibition business.”

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” Michael O’Leary, CEO of Cinema United, said Friday. "Theaters will close, communities will suffer, jobs will be lost.”

The Writers Guild of America sounded a similar alarm and called for the merger to be blocked.

The Producers Guild of America said the Netflix deal must prove that it protects workers' livelihoods and theatrical distribution. “Legacy studios are more than content libraries — within their vaults are the character and culture of our nation," the union added.

Warner Bros., which is 102 years old, is one of the “big five” studios left in Hollywood. If the Netflix sale goes through, the remaining legacy studios would be Disney, Paramount, Sony Pictures and Universal.

The Netflix-Warner deal also sent shock waves through Washington, on both sides of the aisle.

Democratic Sen. Elizabeth Warren, a longtime antitrust hawk, said the proposed merger “looks like an anti-monopoly nightmare.” And Sen. Roger Marshall, a Kansas Republican and close Trump ally, said the deal “raises serious red flags for consumers, creators, movie theaters and local businesses alike.”

Friday’s announcement followed a monthslong bidding war for Warner. Rumors of interest from Netflix, as well as NBC owner Comcast, started bubbling up in the fall. Skydance-owned Paramount, which completed its own $8 billion merger in August, also reportedly made several all-cash offers.

Paramount seemed like the front-runner for some time, and unlike Netflix or Comcast, it was reportedly vying to buy Warner’s entire company, including its cable networks and news business.

Beyond combining two of Hollywood's legacy studios, that would have brought Paramount-owned CBS and Warner's CNN under the same roof. Such sizeable consolidation would have vastly reshaped America's TV media landscape, and perhaps raised questions about shifts in editorial control — as seen at CBS News both leading up to and following Skydance's purchase of Paramount.

Paramount did not immediately respond to a request for comment Friday from The Associated Press.

While Netflix's bid won over Warner's approval, experts stressed that a bumpy regulatory road lies ahead.

“No doubt politics are going to come into play,” Proulx said. He pointed particularly to the Trump administration’s relationship with the family of Larry Ellison, whose son David runs Paramount, and reports of that company’s frustrations over Warner's sale process — both of which, he noted, “can’t be ignored as part of the calculus as to the outcome of all of this.”

Christina DePasquale, a Johns Hopkins University professor who specializes in antitrust issues, said the government might be skeptical of a streaming behemoth controlling both the production and distribution of content.

Warner Bros. Discovery, which was formed just three and a half years ago, announced its intention to split its streaming and studio operations from its cable business back in June. The move arrived as more and more consumers continue to “cut the cord” and rely almost entirely on streaming.

The company outlined plans for HBO, HBO Max, as well as Warner Bros. Television, Warner Bros. Motion Picture Group and DC Studios, to become part of a new streaming and studios company. That is what Netflix is now acquiring. Meanwhile, networks such as CNN, Discovery and TNT Sports and other digital products will make up a separate cable counterpart called Discovery Global.

Warner signaled that it was open to a sale of all of parts of its business back in October, citing “unsolicited interest" it had received. Now that it's agreed to Netflix's bid, Discovery Global is set to become a new publicly traded company by the third quarter of 2026.

Ott reported from Washington. Associated Press writers Matt Sedensky in New York, Matt Brown in Washington and Lindsey Bahr in Pittsburgh contributed to this report.

The Warner Bros. water tower is seen at Warner Bros. Studios in Burbank, Calif., Friday, Dec. 5, 2025. (AP Photo/Jae C. Hong)

The Warner Bros. water tower is seen at Warner Bros. Studios in Burbank, Calif., Friday, Dec. 5, 2025. (AP Photo/Jae C. Hong)

An aerial view shows Warner Bros. Studios in Burbank, Calif., Friday, Dec. 5, 2025. (AP Photo/Jae C. Hong)

FILE - A visitor walks past portraits of DC Comics superheroes as she enters the "Action and Magic Made Here" interactive experience at the Warner Bros. Studio Tour Hollywood media preview on June 24, 2021, in Burbank, Calif. (AP Photo/Chris Pizzello, File)

FILE - The Netflix logo is shown in this photo from the company's website on Feb. 2, 2023, in New York. (AP Photo/Richard Drew, File)

When Kevin Ketels bought an electric 2026 Chevrolet Blazer last year, he wasn't thinking about the cost of gas. He just thought EVs were better and “wanted to be part of the future.” Now that the Iran war is spiking prices at the pump, the Detroit man is happy he is no longer filling up his 11-year-old gas-powered SUV.

“Electricity can go up, but it won’t go up nearly as much as gas will and it won’t go up nearly as fast, either,” said Ketels, 55, an assistant professor of global supply chain management at Wayne State University.

Experts say prolonged high gas prices may drive some EV interest and sales, especially if drivers assume their electricity prices won't be affected by the crises.

But many factors influence consumer EV purchases — and electricity rates.

Drivers of gas-powered vehicles are much more vulnerable to fluctuating prices that result from global conflict than those who charge their cars. The national average for a gallon of regular gas this week was $3.57, up from $2.94 a month ago, according to AAA.

Meanwhile, “residential electricity prices are regulated and are much less volatile than gasoline prices,” said University of California, Davis economics professor Erich Muehlegger. “As a result, EV owners are largely unaffected by oil price shocks.”

But experts say electricity prices have been increasing nationally for a variety of reasons, including surging power demand from new data centers.

“This is an inflationary event,” Holt Edwards, principal in Bracewell’s Policy Resolution Group, said of the war. “Is this the driver in electricity prices? I think probably not. But it’s certainly a contributing factor.”

To what extent oil and gas conflicts could translate to the electricity sector is yet to be seen.

When it comes to the electricity an EV owner is tapping, much of the cost depends on which sources of electricity are in a local grid's power mix, experts say.

Because regulators set residential electricity prices annually, most households are sheltered from month-to-month changes in natural gas costs. Though experts say higher natural gas prices can increase the cost of generating electricity, natural gas prices haven’t risen as quickly or as much as oil prices have recently.

Those are just two of many energy sources — including coal, nuclear and renewables — that power the electric grid.

“The energy component varies depending on the energy you’re using and the price of the energy that you’re using to generate electricity,” said Pierpaolo Cazzola, an energy expert at Columbia University’s Center on Global Energy Policy. “What happens is that in the U.S., the variation of the price of the energy component is smaller than it is elsewhere.”

The experts said persistent war could affect electricity bills in the future. And that is all the more reason for countries to transition to clean power, they said.

“Clean power and electrification combined is what provides the most security,” said Euan Graham, an analyst at energy think tank Ember.

Michael B. Klein, a 56-year-old software developer in Evanston, Illinois, has driven EVs for the past eight years to save on fuel costs and because of environmental concerns.

Every time electrical grid efficiency improves — especially as renewables are added — “I get that benefit no matter what,” said Klein, who drives a Chevy Bolt. “They can improve the efficiency of gas engines, but you have to get a new car in order to reap the benefit of that.”

Several experts say high gasoline prices are a strong driver of EV sales, particularly if high prices persist. Drivers also consider more gasoline-efficient hybrid vehicles during these times.

Car-shopping resource Edmunds analyzed consumer shopping data for the week starting March 2, after the Iran war had begun. They found that interest in hybrids, plug-in hybrids and battery EVs accounted for 22.4% of all vehicle research activity on their site that week, up from 20.7% the previous week. Analysts also looked back at the last major nationwide fuel price surges in 2022, and they saw that consideration of electrified vehicles rose sharply then, too.

But whether this means more EV purchases depends on whether buyers expect to save not just now but in the future, experts say.

Adding to the complexity: A sudden increase in EV demand could drive up prices, Graham said.

“I think the real step change would be in whether this causes governments to shift tax, tariff policies around EVs,” Graham said. Doing so would help reduce fossil fuel dependence, he said.

Pretty much.

People who buy EVs have a “really substantial” gas savings over the life of their vehicles even without government tax credits, said Peter Zalzal, an attorney with Environmental Defense Fund.

“We’re talking about thousands and thousands of dollars” in savings, Zalzal said. “And as gas prices increase, those savings are only greater. Fuel costs are a big piece of overall vehicle costs, and increases in fuel prices have significant impacts on people.”

However, the upfront cost of a new EV is still more than that of a gasoline-powered vehicle; new EVs sold for an average of $55,300 last month, while new vehicles overall sold for an average $49,353, according to auto-buying resource Kelley Blue Book. Some experts also expressed national security concerns with EVs because China dominates significant parts of the EV supply chain.

Ketels, the EV owner and professor, said he believes EVs and renewable energy should be a strategic priority for individuals and the U.S. because they could be produced domestically “and we don’t have those fluctuations and those worries.”

But because the federal government has withdrawn many incentives for both, “it puts us at a disadvantage globally,” Ketels said. “I think it’s been a terrible mistake to withdraw these incentives and to attack the sustainable energy industry,” and the war “is just making it that much more obvious.”

Read more of AP’s climate coverage.

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An electric vehicle charges at a station Wednesday, March 11, 2026, in Lincolnwood, Ill. (AP Photo/Erin Hooley)

An electric vehicle charges at a station Wednesday, March 11, 2026, in Lincolnwood, Ill. (AP Photo/Erin Hooley)

Electric vehicles charge at a station Wednesday, March 11, 2026, in Lincolnwood, Ill. (AP Photo/Erin Hooley)