According to a report by TheWrap, Netflix is now entering exclusive talks to buy Warner Bros. Discovery, having outbid other competitors for the Batman-owning megacorp. If the deal goes through, rumored to be at $30 a share, it would mean the streaming giant would own everything from HBO to DC comics, including all your favorite Lego and Batman games.
Warner Bros. boss David Zaslav has been making it clear he wants to sell the company for a good while now, but holding out for a big exit. In October this year he turned down a bid from Paramount said to be at $20 a share, with Bloomberg claiming the CEO was holding out for 50 percent higher. That valuation seemed crazy, and it was assumed that Paramount came in much lower to test the waters, with the expectation of either a $25 per share bid to follow, or more hostile takeover moves. However, instead, it seems Netflix has swooped in with that $30 offer thus won the war.
What are the implications of this deal?
If the deal goes through, this would mean streaming giant Netflix would own one of its big rivals, HBO Max, and presumably look to merge the two services. It would also own Warner’s entire movie business including New Line Cinema, all of DC Entertainement, the Discovery network of channels, and multiple networks like CNN, TBS, TNT and the Cartoon Network. And, of course, Warner Bros. Games.
In a normal universe, this would be the sort of deal that would be tangled in monopolistic concerns for years to come, as people questioned the unparalleled power this could offer Netflix over multiple industries. However, given other recent mergers that have taken place after, um, payments made to the Trump orbit, what might happen is anyone’s guess. However, earlier talk last month of the potential deal between Netflix and Warner resulted in antitrust concerns being raised, and certainly there will be a lot of fight from those concerned how the deal could affect Hollywood.
Yet, at the same time, Paramount was allowed to merge with Skydance and Disney was allowed to buy Fox, so Netflix has plenty of precedent to argue from. As it happens, it could be Paramount that objects the loudest to the Netflix deal, given how it and so many others had assumed it would get Warner eventually, and the company is already questioning the “fairness and adequacy” of the process. A Warner attorney wrote, “It has become increasingly clear, through media reporting and otherwise, that WBD appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders, and embarked on a myopic process with a predetermined outcome that favors a single bidder.”
A messy breakup for gaming?
The Netflix deal also makes another aspect of Warner Bros. Discovery more interesting. Zaslav had appeared determined to break up the company such that its linear cable channel businesses would be separated from the rest, and then that loss-making sector take all the company’s debt with it. Because that’s legal I guess. However, while Paramount likely wouldn’t want to end up owning a bunch of profitless cable channels, for Netflix the vast number of new shows to stream could be a real boon. Not only would it have everything on HBO Max, but also be able to strip-mine the remaining cable channels for extra content.
At the same time, the deal could be very concerning for games players, given Netflix’s very clear backward step from anything other than mobile gaming. Its owning the studios that develop the Arkham and Lego games could mean bad times for console players if the pattern continues.
There’s obviously a lot of fighting to come, and presumably some hefty legal challenges from those who feel dropped at the altar, let alone the antitrust maneuvers. But given [broad sweeping gesture], it won’t be in the least bit surprising to see it happening sooner rather than later.
