Netflix's $72B Deal To Acquire Warner Bros. Includes 100M SF Of Real Estate
Netflix stands to gain more than Superman, Monica Geller and Harry Potter if its contentious multibillion-dollar deal to acquire Warner Bros. Discovery goes through.
If the deal closes — not a certainty with antitrust concerns swirling and a countering hostile bid from Paramount on Monday — Warner Bros.' 97M SF of global real estate will all be under the streaming giant’s control.
Much of that is studio space, including its 2.6M SF film and television complex in Burbank, California, which encompasses 31 soundstages and 11 sets across its 110-acre main lot. In the UK, Warner Bros. owns a 1.3M SF Leavesden complex with 350K SF of soundstages and its own 100-acre back lot.
Along with an iconic water tower, Warner Bros. also owns office complexes and studio lots, set-building space and back lots. That includes a nearly 3M SF footprint in LA encompassing industrial, offices and studios.
Netflix has built its own robust 5.2M SF global footprint, with 2M SF of that in LA, though it is more commonly a tenant than a property owner. A billion-dollar New Jersey studio complex across 300 acres is also on the way, as the $55M land deal closed Monday.
It is unclear what Netflix would do with 100M SF of extra space, but LA’s entertainment district is in desperate need of more activity.
Studios, especially those in Southern California, have turned from glitzy and boisterous real estate gems to underperforming ghost towns as the entertainment industry has struggled to claw its way back from pandemic-era shutdowns, labor strikes and industry shifts.
California’s film and TV tax credit program doubled to $750M in July in an effort to move productions back to Tinseltown now that competition has sprung up all around the country, including Atlanta’s Y’allywood and a Texas initiative led by television director Taylor Sheridan.
Even so, shoot days in the LA area plummeted 13.2% year-over-year last quarter. Only 63% of stages owned by studio-heavy REIT Hudson Pacific Properties were leased in Q3, pointing to the drop in new productions.
Netflix offered a $72B cash-and-stock deal to acquire Warner Bros., which breaks down to $27.75 per share. To sweeten the deal in a heated bidding war with Comcast and Paramount, Netflix will take on $10B in Warner’s debt, making the deal worth $82.7B.
The deal still has a ways to go. Paramount launched a hostile takeover bid Monday for $30 a share, valuing the company at $108B.
The merger has also drawn criticism as a monopoly play that could push down wages and cut jobs for entertainment workers. Netflix would control half of the United States’ streaming market.
The Trump administration and Sen. Elizabeth Warren have expressed skepticism and concern over the deal, and it is expected to be scrutinized by European antitrust regulators.
If it can earn regulatory approval, Netflix would rise from its already industry-leading 300 million subscribers to 420 million with the addition of HBO and HBO Max. Second-place Amazon Prime has 220 million subscribers.
