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)

NEW YORK (AP) — The U.S. stock market rose to the edge of its all-time high on Friday.

The S&P 500 added 0.2% and finished just 0.3% shy of its record closing level, which was set in October. It had briefly topped the mark during the day, before paring its gain.

The Dow Jones Industrial Average added 104 points, or 0.2%, and the Nasdaq composite gained 0.3%.

The modest moves capped a quiet week for Wall Street, offering a respite following weeks of sharp and scary swings.

Ulta Beauty helped lead the market and jumped 12.7% after the retailer reported stronger profit and revenue for the latest quarter than expected. CEO Kecia Steelman said its customers are broadly feeling pressure, but Ulta saw growth across its categories, particularly in e-commerce. It raised its forecast for revenue over the full year.

Another encouraging signal for the holiday shopping season came from Victoria’s Secret & Co. It delivered a milder loss for the latest quarter than analysts expected, and it likewise raised its forecast for sales over the full year. Its stock rallied 18%.

Warner Bros. Discovery rose 6.3% after Netflix said it would buy Warner Bros. for $72 billion in cash and stock following its pending split from Discovery Global.

The deal for the company behind HBO Max, “Casablanca” and “Harry Potter” is not a sure thing, though. It could raise fears at the U.S. government about too much industry power residing at Netflix.

Shares of Netflix fell 2.9%. Paramount Skydance, which earlier had been seen as a front-runner to buy Warner Bros., sank 9.8%.

Also on the losing end of Wall Street was SoFi Technologies. The financial technology company fell 6.1% to $27.78 after saying it would add $1.5 billion worth of its stock into the market in order to raise cash. It’s selling the stock at a price of $27.50 per share.

All told, the S&P 500 rose 13.28 points to 6,870.40. The Dow Jones Industrial Average added 104.05 to 47,954.99, and the Nasdaq composite gained 72.99 to 23,578.13.

If the S&P 500 does return to a record, it would mark the latest time the U.S. stock market has powered past what seemed to be a debilitating set of worries. Most recently, those concerns centered on what the Federal Reserve will do with interest rates, whether too many dollars are flowing into artificial-intelligence technology and if sharp drops for cryptocurrencies would bleed over into other markets.

After some back and forth, the widespread expectation among traders is now that the Fed will cut its main interest rate next week in hopes of shoring up the slowing U.S. job market. If it does, that would be the third cut of the year.

Investors love lower interest rates because they boost prices for investments and can juice the economy. The downside is that they can worsen inflation, which is stubbornly remaining above the Fed’s 2% target.

Economic reports released on Friday did little to change expectations for a coming cut. One said that an underlying measure of inflation that the Fed prefers to use was at 2.8% in September, exactly as economists expected.

A separate report said U.S. consumers appear to be downgrading their expectations for inflation coming in the near future. They’re now forecasting 4.1% inflation for the year ahead, down from their forecast of 4.5% last month, according to the University of Michigan.

That’s the lowest such forecast since January, which is important because heightened expectations for inflation can create a vicious cycle that only worsens inflation.

In the bond market, Treasury yields climbed. The yield on the 10-year Treasury rose to 4.13% from 4.11% late Thursday.

In stock markets abroad, indexes were mixed in Europe and Asia.

Germany’s DAX returned 0.6%, and South Korea’s Kospi jumped 1.8% for two of the world’s bigger gains.

Tokyo’s Nikkei 225 fell 1.1% after data showed household spending in Japan fell 3.0% in October from a year earlier. It was the sharpest drop since January 2024. Japanese markets have been shaky recently after the Bank of Japan hinted that hikes to interest rates may be coming.

AP Writer Teresa Cerojano contributed.

Options trader Joseph D'Arrigo works on the floor of the New York Stock Exchange, Tuesday, Dec. 2, 2025. (AP Photo/Richard Drew)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)

Currency traders pass by a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the Hana Bank headquarters, in Seoul, South Korea, Friday, Dec. 5, 2025. (AP Photo/Ahn Young-joon)