Netflix has emerged as the winner in the bidding war for both HBO Max and Warner Bros., a deal that would combine two of the world's largest streaming services with one of the most prolific movie and television studios. Should the move be approved, it would lead to a major shift in the entertainment industry. Here are the details on what is shaping up to be a blockbuster deal in Hollywood.

Netflix Unveils Deal to Purchase Warner Bros.

Streaming giant Netflix announced its latest proposed acquisition on Friday morning, detailing that it has agreed to buy Warner Bros. Discovery (WBD) for $72 billion, plus debt. Included in the deal are the rights to the HBO Max streaming service. The deal gives Netflix control over a number of popular intellectual properties, including Game of Thrones, Harry Potter, and Batman.

However, the deal will first have to undergo a comprehensive regulatory review in the U.S. and abroad. According to WBD, it is still going forward with the strategy to split its assets into two publicly traded halves next year. This split would give Netflix the rights to Warner Bros., while the Discovery Global half will remain separate. Discovery Global is home to CNN and other major cable channels. The planned split is expected to occur in the summer of 2026.

Entertainment experts caution that the deal is far from being official. In addition to the necessary regulatory review, Paramount and Comcast may still decide to pursue WBD. Industry experts had thought for weeks that Paramount would end up on top of this bidding war, primarily because the company had expressed interest in purchasing all of WBD. It is being reported that an aggressive offer by Netflix sent it to the top of the bidding war, overtaking Paramount's offers.

Netflix co-CEO Ted Sarandos said that he understood why investors were surprised by the move, acknowledging that the streaming service had not positioned itself as a buyer in the past. Sarandos told Wall Street analysts that his company could not let the rare opportunity pass.

Sarandos also told Bloomberg that he understands the skepticism surrounding the acquisition. He admitted that many mergers of this magnitude have failed, trying to assure investors that Netflix understands the assets that they are looking to take over. Sarandos is positioning Netflix as a company that is still adding subscribers and not looking to acquire Warner Bros. as a means to rescue a failing business model.

It is being reported that Netflix agreed to pay WBD billions of dollars should the deal fail. This is similar to a deal that Paramount had proposed during the early stages of the auction process.

Hurdles in the Way of the Acquisition

Netflix will need to clear numerous hurdles in order to finalize the acquisition of Warner Bros. The biggest potential roadblock will be the regulatory approval process. Sen. Mike Lee is already expressing concern that the deal may not clear antitrust laws.

The Trump administration had seemed to favor Paramount in the early stage of the bidding wars. Paramount CEO David Ellison had positioned himself in the president's corner, signaling that Trump would approve the deal. However, now the favored position is being called into question with Netflix coming out with the prize.

The U.S. is not the only country that will put the transaction under a microscope. It is also likely that Netflix will face an uncertain regulatory landscape across Europe.

Netflix gave a hint about its arguments for regulators when it announced the deal on Friday. The company is defending the acquisition by saying that the assets are complementary, noting that they will produce "more opportunities for the creative community" should it pass through the government regulatory review.

In addition to the red flags raised by politicians about the regulatory review, Hollywood insiders are also expressing doubt that the deal will go through. Cinema United, a trade association that represents movie theaters, noted that the deal is a "threat to the global exhibition business."

Netflix responded to these objections immediately on Friday, detailing that it plans to maintain Warner Bros.' current operational strategy, including its emphasis on theatrical releases.

Critics of the proposed acquisition worry that Netflix would dominate the streaming wars, eliminating competition and pushing movies out of theaters more quickly. Because Netflix has built its reputation on streaming movies, it will have a greater incentive to bring the biggest hits out of the theater onto its platform faster than the norm. This is why the movie theater industry is generally opposed to the deal.

One thing that is certain is that this will be one of the most closely watched business transactions in the months to come.

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