Netflix to Buy Warner Bros. in $72 Billion Cash, Stock Deal
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Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
This is Bloomberg Tech coming up, a historic media shakeup as Netflix agrees to buy Warner Brothers Discovery. Details on the $72 billion cash and stock deal throughout the hour.
Plus, continued clash between the US and the EU on free speech as the European Union finds Elon Musk's X platform $140 million.
and HPE's outlook disappoints on slower AI server deals. We speak to the CEO. Let's get right to it. Netflix buying Warner Brothers Discovery. The value of the deal, $72 billion. Warner Brothers Discovery shareholders set to receive $27.75 per share in cash and stock. The value of the deal, or value of Warner Brothers, almost $83 billion when you take into account debt. This is gonna go on for a while. The expectation is it could close within 18 months. A lot of questions, Caro, on the why and also about the price when you consider the bidding war that was going on for this name.
And this is for streaming. This is for studios only. Earlier today, Ted Sarandos spoke on a conference call, Ed, about this deal. Here's what he had to say. I know some of you are surprised that we're making this acquisition, and I certainly understand why. Over the years, we have been known to be builders, not buyers. We already have incredible shows and movies and a great business model, and it's working for talent, it's working for consumers, and it's working for shareholders. But this is a rare opportunity that's going to help us achieve our mission to entertain the world and to bring people together through great stories. Bloomberg's Lucas Shaw, who leads Bloomberg's coverage of media and entertainment, joins us now.
And Lucas, those exact words, builders, not buyers, was exactly what Greg Peters, the other co-CEO, said to you on a stage, but a few months ago. Did it take you by surprise? By this point, no. It's funny that you ask that. I've spoken with a few different people at Netflix this morning, and they all asked me if I was surprised or shocked. And it's true that they've never done anything like this before. It represents a huge change for the business. If this deal gets through, and I know we may get there, it'll double in size pretty much as soon as they add all these folks. But Netflix has always been a company where they kind of never say never. They say they're not going to do something, and then they end up doing it.
And it's been obvious over the course of the last two months, really since Greg's appearance at Screen Time, my confidence this would happen has increased bit by bit, including as people from Netflix told me that they were getting more and more serious about it.
Lucas, I think there's a lot of reporting to do here on Bloomberg Tech, especially for the audience members that are hearing about this deal for the first time. What is Netflix proposing to do with Warner Brothers Discovery? What does Warner Brothers Discovery plan to spin out? Because there's an element that they'll have to divest or start new companies of some things. And we're reporting that in this bidding process, Paramount came in with a $30 per share offer. So it sounds as if Netflix had a lower offer than Warner Brothers Discovery went with.
I'll take them in three, although I will say that the Warner offer or the Paramount offer was not technically higher. But I'll get into it.
What is Netflix's agreement to buy Warner Bros. Discovery about?
So the process is, assuming that this all continues as planned, Warner Brothers Discovery will spin off its cable networks, the CNN, TNT, TBSs of the world, sometime third quarter next year.
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