On Friday, December 5, streaming behemoth Netflix announced that it will purchase Warner Bros. Discovery, a film and television studio, for around USD 83 billion. This is the largest merger in the entertainment sector this decade.
The deal, which is opposed by prominent figures in Hollywood and will be subject to regulatory examination by the Trump administration, grants Netflix access to both the esteemed streaming service HBO Max and a sizable film library.
Cable networks like CNN, TNT, TBS, and Discovery are not included since Warner Bros. Discovery is spinning them off before the merger closes.
In addition to more contemporary blockbuster series like The Sopranos, Game of Thrones, and the Harry Potter films, Warner Brothers has produced cinematic classics like Casablanca and Citizen Kane over the years.
Ted Sarandos, co-CEO of Netflix, which has created international hits like Stranger Things, KPop Demon Hunters, and Squid Game, stated, “Together, we can give audiences more of what they love and help define the next century of storytelling.”
The purchase of Warner Bros. Discovery by Netflix
Disney’s USD 71 billion purchase of Fox in 2019 was the largest such transaction to date.
Warner Bros. Discovery is valued at USD 27.75 per share in the transaction, which suggests an enterprise value of about USD 82.7 billion, including debt, and a total equity value of about USD 72.0 billion.
Netflix’s stock price dropped more than three percent on Friday amid undertones of disapproval and confusion around the agreement.
In the statement, Warner Bros. Discovery President and CEO David Zaslav remarked, “Today’s announcement combines two of the greatest storytelling companies in the world.”
The two firms’ boards unanimously authorized the deal, which is expected to close in 12 to 18 months, they added.
Kathleen Brooks, research director at trading and investment business XTB, stated that Netflix wants to control the film industry.
Fears of a Netflix monopoly once it commands such a “colossus in the TV and movie business” were among the many possible problems the analyst raised in relation to the transaction.
Antitrust issues expected
Given that a merger this substantial would require regulatory permission from antitrust authorities in the US and possibly internationally, Brooks said she anticipated political obstacles.
White House officials have lately voiced concerns about Netflix’s acquisition, claiming it might give the platform a dominant position in the US content industry, according to the New York Post.
After receiving several unsolicited proposals, the parent company of HBO, CNN, and the Warner Bros. film studio formally put itself up for sale in October, putting aside a planned split into two distinct businesses, one focused on streaming and studios and the other on traditional cable networks.
The billionaire family of Oracle founder Larry Ellison, one of the richest men in the world and a Trump supporter, just purchased Warner Bros. Discovery, which was initially sought by Paramount.
Over the course of the US Thanksgiving weekend, Netflix joined Paramount Skydance and Comcast, the company that owns NBCUniversal, in a second round of an auction.
According to sources quoted by Bloomberg, Netflix, the biggest streaming service in the world with over 280 million members worldwide, has been negotiating a bridging loan for tens of billions of dollars to fund the acquisition.
Leading Hollywood figures have expressed their wish to keep Warner Bros. out of Netflix’s hands, citing worries that the streaming service primarily aims to restrict the theatrical distribution of its movies.
Before the news on Friday, James Cameron, the filmmaker of Titanic, referred to any takeover of Warner Bros. by Netflix as “a disaster.”
Despite frequently stating that it believes the movie theater era is virtually finished, Netflix says it plans to continue Warner Bros.’ theatrical picture releases and to increase US content production.
The top Hollywood players are undergoing significant strategic reorganizations as a result of the streaming wars and the demise of traditional entertainment.
For USD 8.45 billion, Amazon purchased the storied Hollywood studio MGM in 2021, getting access to a library of almost 4,000 movies, including the Rocky and James Bond franchises.
AFP News reported this news.
