In early December, the US streaming giant Netflix announced its plan to acquire Warner Bros. Discovery’s film and streaming media assets for $72 billion, including Warner Bros. film and TV production departments, as well as core brands like HBO and HBO Max, a move that sent shockwaves through the global entertainment industry.
Netflix CEO Greg Peters stated that the acquisition would significantly expand their content library and notably increase production capabilities in the US, providing creators with more opportunities to reach global audiences. Peters commented, “This acquisition will enhance our products and services and accelerate our business development in the coming decades.”
However, the progress of this Hollywood’s largest-ever acquisition has not been without hurdles. Just days after the announcement, Paramount Skydance Media suddenly proposed an all-cash acquisition to Warner Bros. Discovery’s shareholders, attempting to disrupt the deal and sparking what could be a public acquisition battle.
Paramount CEO and Chairman David Ellison stated on CNBC, “Our real objective is to accomplish what we originally set out to do.”
On December 17, Warner’s board recommended shareholders reject Paramount’s acquisition proposal and support Netflix’s acquisition plan. A few days later, Paramount revised its acquisition proposal, with billionaire Larry Ellison, David Ellison’s father, stepping in to personally guarantee the deal, intensifying the acquisition battle.
So, how might this impact your wallet and streaming experience?
Warner has a history of over a century in the entertainment industry, with a vast content library including classic TV series and films like “The Big Bang Theory,” “The Sopranos,” “Game of Thrones,” “The Wizard of Oz,” and the DC Universe.
This acquisition does not include Warner’s cable television network division, which owns major cable networks like CNN, TNT, and Discovery.
Netflix Co-CEO Ted Sarandos stated in an official statement, “Our mission has always been to entertain the world. By combining Warner Bros.’ amazing film library – spanning from classics like ‘Casablanca’ and ‘Citizen Kane’ to modern hits like ‘Harry Potter’ and ‘Friends’ – with our culturally impactful original programs like ‘Stranger Things,’ ‘KPop Demon Hunters,’ and ‘Squid Game,’ we will do even better.”
Netflix mentioned in their official statement that they expect to “maintain Warner Bros.’ current operational model and leverage its strengths, including continued theatrical releases of films.”
Last week, Sarandos said in a call with investors and the media, “I don’t think this will change Netflix’s or Warner’s film strategy. I think, over time, release windows will become more consumer-friendly to more rapidly fulfill audience demand.”
He added that films originally slated for theatrical release through Warner Bros. would continue as planned. “But our primary goal is to provide members with first-run movies because that’s what they expect.”
Industry experts anticipate that reduced competition in the entertainment industry could lead to an increase in consumer costs.
Nelson Granados, executive director of the Entertainment, Media, and Sports Business Institute at Pepperdine Graziadio Business School, stated, “Netflix has not only solidified its position as a top-tier streaming service globally, but now it’s also a multi-billion-dollar content creation company. This integration will bring a larger market, so if Netflix is bolstering its content library and production capabilities through acquiring Warner Bros., it will seek to capture that value by raising subscription prices.”
“In the same circumstances, Netflix should be able to do this. However, competitors will take action, so it’s unclear whether they can translate this into higher profits or merely as a competitive means to solidify their market position,” he added.
After the acquisition announcement on December 17, Netflix sent an email to its subscribers stating that “both streaming services will continue to operate independently” and that “everything remains the same today.”
In early December, Paramount proposed to acquire Warner for $30 per share in an all-cash deal totaling $108.4 billion, including Warner and its global TV network division. Paramount claimed that the deal would bring higher value to Warner shareholders and be smoother in terms of regulatory approvals.
However, Warner’s board recommended rejecting Paramount’s hostile acquisition proposal on December 17. The board pointed out in a shareholder letter that Paramount had been “repeatedly misleading” in financing assurances to the board and cautioned about “several significant risks” in the deal.
Subsequently, Paramount made a revised offer, with Oracle’s co-founder and chairman Larry Ellison agreeing to personally provide up to $40.4 billion in equity financing.
Netflix stated in an official statement that they expect to complete the transaction within 12 to 18 months. However, experts note that this deal involves scrutiny on multiple levels and could evolve into an enduring regulatory battle. Such a massive acquisition case must pass reviews from federal regulatory agencies like the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to ensure compliance with antitrust laws.
If the deal proceeds smoothly, according to data from the streaming viewing analysis platform JustWatch, the merged media giant will control approximately one-third of the US streaming video market. Opposition to such a merger spans across different sectors.
Senator Elizabeth Warren bluntly stated that the merger between Paramount Skydance and Warner Bros. would trigger a five-alarm antitrust fire, precisely the situation that the antitrust laws seek to prevent.
President Trump, when asked about Netflix’s acquisition deal, remarked, “It has to go through the entire review process, and the outcome remains to be seen,” noting that the transaction “might be a problem.”
Granados noted that from a technical and data perspective, antitrust prosecutors might not be able to bring strong monopoly charges on the content side, but the real “problem may be more on the distribution side, given that two major streaming services – Netflix and HBO Max – will be under the same owner. Regardless, considering the prominence of these two brands, the legal hurdles they need to overcome will be enormous.”
(Reference: Yahoo Finance)