The entertainment business is waking up to a seismic shock Friday morning as Netflix says it has reached a definitive agreement with Warner Bros. Discovery to buy its studio and streaming businesses.

The deal does not include WBD’s sports assets like TNT, TBS, or Bleacher Report.

The pact, arriving just four days after second-round bids were due from multiple bidders, carries an enterprise value of $82.7 billion, representing by far the largest transaction of this type for Netflix since its 1997 founding. Netflix entered exclusive talks with WBD earlier this week, and the final deal came together rapidly.

Bringing in the WBD studios greatly accelerates Netflix’s original content production, as well as its library, and further burnishes what is already the world’s most dominant streaming service—with major implications for Hollywood. Netflix has more than 300 million subscribers, while WBD has 128 million streaming subscribers, mostly with HBO Max.

“This acquisition will improve our offering and accelerate our business for decades to come,” said Netflix co-CEO Greg Peters. “Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create.”

Along with this deal, WBD will also continue its previously disclosed process to split itself into two independent, publicly traded companies, with most of the sports assets residing in a planned Discovery Global. That entity is also developing a new sports-centric streaming service, and the split is expected to be done in the third quarter of 2026, before the closing of the Netflix deal. The studios and streaming businesses will then go to Netflix. 

A Netflix-WBD combination could experience regulatory issues, particularly from an unpredictable Trump Administration. Netflix is offering a $5 billion breakup fee if a pact is not approved, signaling its confidence and intent to work through that process.

There are also hurt feelings elsewhere, as before the Netflix deal was announced early Friday, CBS Sports parent company Paramount wrote that “it has become increasingly clear … that WBD appears to have abandoned the semblance and reality of a fair transaction process.”

In addition to Netflix and Paramount, NBC Sports parent company Comcast also bid for part of WBD.  

Theater owners and producers, already wary of Netflix’s growing power in Hollywood, are also expected to object strenuously to the deal.

On Netflix’s last quarterly earnings call, the company had assumed a more reserved posture on making a play for WBD, saying of any potential acquisition activity, “nothing is a must for us.” The WBD assets, however, proved far too tempting to pass up.

Additionally, the company’s ambitions are only accelerating—with sports standing in a central position within that. Netflix later this month will air a Christmas Day NFL doubleheader, and it also recently completed an agreement with Major League Baseball that includes rights to the Home Run Derby and a season-opening game, among other content. 

Just this week, Netflix also completed a deal with the producers of the popular The Rest Is Football podcast to produce a daily TV show during next year’s FIFA men’s World Cup.