Netflix Acquisition Poised to Reshape Hollywood Real Estate

Netflix’s Boldest Move Yet

Netflix has agreed to acquire Warner Bros. Entertainment—including its studios, HBO, and HBO Max—for $72B in cash and stock. This blockbuster deal could realign the entertainment industry, reports CoStar.

The agreement depends on Warner Bros. Discovery completing a planned spinoff of its global networks division. The deal is expected to close by late 2026.

More than just a content expansion, the acquisition would give Netflix a vast real estate portfolio. It includes studio lots, soundstages, and office campuses. This would make Netflix one of the largest physical media landlords in entertainment.

Inside the Real Estate Portfolio

The merger would combine over 100M SF of global real estate. Warner Bros. owns 97M SF, including the Warner Bros. Studios in Burbank, which features 30 soundstages and the brand’s iconic water tower. It also owns the Leavesden Studios in the UK, a base for major franchise productions.

Netflix currently leases 5.2M SF of office and studio space. It owns only a few properties, such as a studio in Albuquerque and the Egyptian Theatre in Los Angeles.

Netflix is also building a $1B production hub in New Jersey. The project will transform 292 acres into a campus with 12 soundstages totaling nearly 500,000 SF.

Implications for Studio Real Estate

Owning Warner Bros. real estate would reduce Netflix’s dependence on leased space in Hollywood. Today, Netflix is a major tenant in several studio complexes. These include the Icon building at Sunset Bronson Studios, leased from Hudson Pacific Properties, and Raleigh Studios, which recently secured a $165M refinancing.

A move toward owned production space could lower Netflix’s costs. It would also give the company more control over filming schedules, a major advantage in today’s competitive production market.

Consolidation and Cost Savings

The deal may lead to a consolidation of real estate and operations. Netflix and Warner Bros. have overlapping headquarters in Hollywood and Burbank.

Analysts expect the combined company to reduce duplicate offices and teams. Netflix projects $2 to $3B in annual savings within three years of closing, partly from cutting redundant leases.

As studio operators look to streamline operations and reposition underused assets, recent efforts to reimagine legacy entertainment districts suggest a broader real estate transformation may already be underway across Los Angeles.

A Changing Production Landscape

The acquisition comes as demand for studio space declines. Soundstage occupancy in Los Angeles dropped to 63% this year, down from over 90% before the pandemic and 2023 labor strikes.

By integrating Warner Bros.’ franchises and production assets, Netflix hopes to stabilize its content pipeline. The company believes this will boost studio activity in Los Angeles.

California is trying to attract more production by expanding its film and TV tax credit program. The annual cap rose to $750M, and the state increased credit rates to 35%, aiming to compete with markets like New York, Georgia, and Texas.

Why It Matters

Netflix’s move signals more than just content acquisition. It marks a shift toward owning the physical infrastructure behind its content. This strategy could give the company a long-term advantage while pressuring independent studio operators.

If the deal goes through, Netflix won’t just stream Hollywood’s biggest titles—it will own the lots where they’re made.

What’s Next

The deal still faces regulatory review and shareholder approval. It also hinges on Warner Bros. Discovery completing its planned restructuring. But if successful, the merger could trigger a major transformation in Hollywood’s real estate and production landscape.