The news details the internal process and competitive bidding war that led to Netflix (NFLX.O) acquiring Warner Bros Discovery (WBD.O) for $72 billion, an agreement announced on a Friday that is set to significantly reshape the global entertainment industry.
Netflix's initial engagement was reportedly a fact-finding mission, but executives quickly recognized the strategic opportunity. Beyond acquiring Warner Bros' deep catalog (which accounts for up to 80% of streaming viewing), Netflix valued the complementary business units, particularly WBD's theatrical distribution and promotion unit and its studio. The acquisition also aimed to accelerate the growth of the HBO Max streaming service using Netflix's established expertise.
Netflix began seriously considering the purchase after WBD announced plans in June to split into two publicly traded companies, separating the cash-generating cable networks from the legendary Warner Bros studios, HBO, and HBO Max.
WBD officially launched an auction on October 21st after rejecting three unsolicited, escalating offers from Paramount Skydance (PSKY.O), which had started in September. Netflix intensified its efforts this autumn, competing against Paramount and Comcast (CMCSA.O) (parent of NBCUniversal).
Warner Bros' board convened daily for eight days before accepting Netflix's $72 billion offer, which sources described as the only binding and complete offer. Comcast's proposal to merge its entertainment division with WBD was deemed too complex and would have taken years to execute, despite creating a unit that would rival Disney.
Paramount's raised offer of $78 billion for the entire company was dismissed by the board over concerns about the financing. To mitigate seller concerns over the expected significant regulatory review, Netflix offered a massive $5.8 billion breakup fee, one of the largest in M&A history, signaling strong conviction in achieving regulatory approval.
The deal culminated a two-month period of intense work by Netflix's advisory team, including Moelis & Company, Wells Fargo, and Skadden, Arps, Slate, Meagher & Flom, who reportedly worked through Thanksgiving to meet the December 1st bid deadline.
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