Netflix's acquisition will need to be approved by the FCC.

The agreement excludes Discovery Global, which will be spun off as previously stated. This unit includes CNN and TNT. Netflix will gain a large catalog of films and TV shows for streaming, including the Harry Potter series, "The Wizard of Oz," and DC Comics content. The Netflix library will also add television shows such as "Friends," "The Sopranos," "The Big Bang Theory," and "Game of Thrones."

Netflix's co-CEO, Ted Sarandos, stated that their mission is to entertain the world. He said that integrating Warner Bros.’ library—from classics like Casablanca to modern hits like Harry Potter and Friends—with their titles like Stranger Things and Squid Game, will help them achieve this goal. Together, he said they can offer audiences more of what they enjoy and shape the future of storytelling.

The deal may take 12 to 18 months to finalize and requires regulatory approval, which could pose challenges. Netflix has launched a campaign to demonstrate the public benefits to the FCC. Netflix plans to utilize Warner Bros.’ studios to create more content for subscribers and theatrical releases. The addition of HBO and HBO Max programming will broaden the options available to Netflix users.

The deal will increase consumer choice and value. Netflix may argue that the deal will expand U.S. production capacity and create jobs through increased content investment. This expansion could attract more subscribers, boosting revenue. Netflix anticipates annual cost savings of $2 billion to $3 billion within three years of closing and expects the deal to increase GAAP earnings by year two.

David Zaslav, President and CEO of Warner Bros. Discovery, commented on the deal, saying it unites two major storytelling companies to deliver entertainment to a wider audience. He noted Warner Bros.' long history of captivating audiences and shaping culture, adding that joining with Netflix will ensure these stories continue to be enjoyed globally for generations.

According to an SEC filing, Netflix will pay Warner Bros. a $5.8 billion break-up fee if the deal fails. Should Warner Bros. Discovery withdraw to sell to another bidder, it would owe Netflix $2.8 billion. Paramount Skydance reportedly made a $30 billion offer for Warner Bros. Discovery, relying more on equity than cash, which led the Warner Bros. Discovery board to favor Netflix's bid.