Netflix on Friday said it is buying Warner Bros. in a deal valued at $82.7 billion, merging the biggest streaming service with a storied studio that has produced films such as “Casablanca” and the “Harry Potter” franchise.

In a statement, Netflix said the deal is expected to close after Warner Bros. Discovery spins off its television networks division, Discovery Global, which is now expected to be completed in the third quarter of 2026. 

The agreement comes after Warner Bros. Discovery, the parent of Warner, had announced in June that it planned to split in two, dividing its cable networks such as CNN and TNT Sports from its streaming and studios business, including HBO Max and Warner Bros. Television. 

But in October, Warner Bros. Discovery said it had attracted interest from companies about buying all or parts of it outright, with the Wall Street Journal reporting that media and entertainment businesses, including Paramount Skydance (the parent company of CBS News) and Comcast Corp., were also pursuing a deal for Warner Bros. 

According to media reports, Paramount Skydance was interested in acquiring all of Warner Bros., including its cable assets such as CNN and Discovery.

Netflix said it will buy Warner Bros. for $27.75 per share, giving the deal an equity value of $72 billion and a total enterprise value of $82.7 billion. The transaction is expected to close in 12 to 18 months, Netflix said.

Buying Warner Bros.’ studios would mark a major strategic shift for Netflix. Under the proposed deal, the streaming giant has pledged to honor any contractual agreements for releasing Warner Bros.’ studio films.

Yet Netflix could face regulatory hurdles in seeking to complete the deal amid concerns the transaction could weaken competition among theaters, Wall Street analysts said.

“Significant concerns have been voiced over the potential impact to the theatrical market should Netflix take over [Warner Bros.],” analysts with Wedbush Securities said in a note to investors, adding that “concerns remain within the industry and among government officials” about the impact of such a deal. 

Why Netflix wants Warner Bros.

In a conference call with investors to discuss the acquisition, Netflix executives said the deal will help the company attract more subscribers, while also creating value for shareholders. 

“We expect to attract and maintain more subscribers, and drive incremental revenue and operating income,” co-CEO Greg Peters said on the call.  “We think it’ll accelerate our business for decades to come.”

Peters was also questioned about his comments at an October conference, when he said that big media mergers “don’t have an amazing track record.” On Friday, the executive said he believed this merger would prove to be different because of Netflix’s expertise in creating content.

“A lot of those failures [are] because the company doing the acquisition didn’t understand the entertainment business,” he said. “We understand the business.”

Analysts said Netflix would benefit by adding Warner Bros.’ extensive streaming and film content.

“The rationale for such a deal stems from merging two overlapping streaming offers into a single flagship Netflix app or a tight Netflix-HBO Max bundle, with one login, one discovery layer and one advertising system,” analysts with market research firm MKI Global said in a report. “Netflix would gain leverage by pairing its global reach with WBD’s brands and library, improving negotiations with advertisers and partners, allowing weaker legacy feeds to be phased out over time, and shifting rights and franchises into the platforms and windows that deliver the best returns.”

Shares of Warner Bros., whose stock price has more than doubled since this summer as speculation of a possible deal heated up, were mostly flat before the start of U.S. trading. Netflix shares fell $2.85, or 2.8%, to $100.50.

—This is a developing story and will be updated