After several weeks of negotiations, Netflix has officially won the bidding war to merge with Warner Bros. Studios for over $82.7 billion. The major streaming service beat out fellow competitors Comcast and Paramount-Skydance for the studio. This marks yet another mega-merger between film studios following Walt Disney’s acquisition of 20th Century Fox in 2019, Warner Bros.’ merger with Discovery in 2022, and Paramount’s merger with Skydance just last year.
Ever since David Zaslav took over as CEO of Warner Bros Discovery, his aim has always been to sell and split the company back up. He introduced cost-cutting initiatives, such as canceling fully completed films like Batgirl and Coyote vs. Acme to save on tax breaks. He also rebooted classic Warner Brothers franchises, including a new DC Studios under James Gunn & Peter Safran, a brand-new 7-season Harry Potter TV series, and reacquired license rights for more Lord of the Rings films with new rights holder Embracer Group Sweden. In a weird turn of events, he changed the HBO Max streaming service to just Max and then back to HBO Max earlier this year.
With the new merger with Netflix, it is expected that Warner Bros. Studios and Discovery, along with some TV assets, will be split. Netflix will now own the studio, the HBO Max streaming service, and all its subsidiaries. David Zaslav will stay on to run the movie and television side of WB (via Financial Times). This move has greatly concerned the Directors Guild of America, led by President Christopher Nolan and theater owners, given Netflix’s staunch stance on minimal theatrical releases (via Deadline). In an official statement, Netflix claims it will leave the studio and its subsidiaries mostly untouched by its streaming empire. Though that remains to be seen. Netflix CEO Ted Sarandos said in a statement:
“Our mission has always been to entertain the world. By combining Warner Bros.’ incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters, and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”
It’s unknown how this will affect the current Warner Bros. slate moving forward, let alone if their theatrical window will be significantly shortened in favor of Netflix streaming events. However, they laid out their plan in the press release:
- Complementary strengths and assets: Warner Bros.’ studios are world-class, with Warner Bros. recognized as a leading supplier of television titles and filmed entertainment. HBO and HBO Max also provide a compelling, complementary offering for consumers. Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films.
- More choice and greater value for consumers: By adding the deep film and TV libraries and HBO and HBO Max programming, Netflix members will have even more high-quality titles from which to choose. This also allows Netflix to optimize its plans for consumers, enhancing viewing options and expanding access to content.
- A stronger entertainment industry: This acquisition will enhance Netflix’s studio capabilities, allowing the Company to significantly expand U.S. production capacity and continue to grow investment in original content over the long term which will create jobs and strengthen the entertainment industry.
- More opportunities for the creative community: By uniting Netflix’s member experience and global reach with Warner Bros.’ renowned franchises and extensive library, the Company will create greater value for talent—offering more opportunities to work with beloved intellectual property, tell new stories and connect with a wider audience than ever before.
- More value for shareholders:By offering members a wider selection of quality series and films, Netflix expects to attract and retain more members, drive more engagement and generate incremental revenue and operating income. The Company also expects to realize at least $2-3 billion of cost savings per year by the third year and expects the transaction to be accretive to GAAP earnings per share by year two.
The Trump Administration has recently said it plans to review and possibly halt the merger due to a potential monopoly the streaming service will now have on other film studios (via The New York Times). It will still need to be approved by the FCC, both nationally and internationally, before it becomes final.
Source: Netflix
