It’s happening: Netflix, the streaming upstart that shook up Hollywood, will buy the industry’s most storied studio, Warner Bros.

The news was announced this morning, with Netflix emerging as the winning bidder in a competitive process that included Paramount Skydance and Comcast. The cash-and-stock transaction values Warner Bros. Discovery at $72 billion, or $27.75 per share, with an enterprise value of about $82.7 billion. The deal includes a $5 billion breakup fee. It is expected to close in the third quarter of 2026, following the planned separation of Warner Bros. Discovery’s Global Networks division into a new publicly traded company called Discovery Global. And though this hasn’t been announced, one can expect HBO Max to be shut down and integrated into Netflix as a tab. So, more Netflix price hikes are likely.

The deal makes sense. The Hollywood company with the most cash has bought a storied studio with a priced library. But Netflix has its own baggage, and many questions and issues swirl around this deal.

The most notable is what Netflix will do with theatrical releases. Warner has contractual obligations to release films in its current slate, but once those pass, what will Netflix do? The company’s co-CEO, Ted Sarandos, would like as many films as possible to exist solely on his platform, without hitting cinemas, and though Netflix has made exceptions to get top talent — notably, granting a wider theatrical window for Greta Gerwig’s 2026 Narnia film — don’t expect him to have had a change of heart.

Reports on the deal say that Netflix has pledged to continue theatrical releases, though the specifics of that commitment remain vague. The prevailing industry expectation is that major superhero films will get full cinema runs, along with established Warner blockbuster franchises like “The Matrix” or “Dune,” but many other Warner films — that would previously have been released wide — will now only receive limited Netflix-style releases for awards eligibility. A notable example of that: “One Battle After Another.”

Then there is the talent problem. David Ellison has goodwill with Hollywood, but Netflix does not — particularly among the most notable auteur directors. Much of Warner’s top director talent will probably no longer make films for the studio, or at least won’t without guaranteed, full theatrical windows.

Netflix will also have to contend with cinema chains refusing to show its films, which matters particularly for international releases. Will chains hold to that and refuse to release “The Batman: Part II”? The outcome is unclear.

Warner has also been co-producing films with other streaming services, with the peak example of this being this year’s “F1,” starring Brad Pitt. That did well enough for discussions of a sequel, but it was made in collaboration with Apple TV, which has licensing deals with F1, so those prospects are now off the table.

The streaming giant’s logic is understandable: the Warner Bros. catalog is valuable, and putting HBO as a tab within Netflix will increase subscriptions. But a Paramount purchase would have extracted more value for the price.