Warner Bros Auction: The Repercussions for the Industry

The unanimous approval by the Boards of Netflix and Warner Bros for the former to acquire Warner Bros Discovery for $83 Billion (including debt) has enormous repercussions for the industry. However, it is not a ‘done deal.’ It still requires... Read more

The unanimous approval by the Boards of Netflix and Warner Bros for the former to acquire Warner Bros Discovery for $83 Billion (including debt) has enormous repercussions for the industry. However, it is not a ‘done deal.’ It still requires Warners Bros shareholder approval, regulatory clearance in the US and Europe, whilst President Trump has commented that it raises ‘potential concern’ and has stated that he would be personally involved in the decision approving the deal and has repeatedly highlighted the size of Netflix’s market share. Added to this uncertainty, Paramount, who initially made a failed bid for Warner Bros, submitted a hostile bid this week which would give Warner Bros shareholders a mere additional $418billion cash. Paramount is backed by numerous investors including Trump’s son-in-law Jared Kushner, Redbird Capital, Apollo, Bank of America and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi.

David Ellison, CEO of Paramount and the son of Larry Ellison, the world’s second richest man has hinted that the current Paramount bid is not the best and final offer. So, the intrigue continues to run and feels like shaping up to a drama to match the most compelling film or television we have ever seen. I do wonder whether a filmmaker could match the marvelous ‘Barbarians at the Gate’ movie

Going back to the Netlfix deal, it was only six weeks ago that Ted Sarandos, co-chief executive officer of Netflix said that there was ‘plenty of runway for growth without fundamentally changing that playbook’, six weeks is a long time in today’s media world.

If the Netflix deal goes through it would create a combined group with 430million subscribers and it’s speculated that cost savings of around $2billion to $3 billion would be achieved. Netflix would acquire a catalogue of films and television programmes including the Harry Potter franchise, Game of Thrones and Friends alongside their own programmes including Squid Games and Stranger Things.

The Warner Bros deal follows the Skydance acquisition of Paramount, Amazon’s acquisition of MGM and the launch of Apple’s streaming service in 2019, plus the move of top YouTubers opening studios in Los Angeles.

Whatever the outcome of the Warners breakup, we are seeing a seismic change in the entertainment industry. Consolidation will no doubt put jobs at risk and potentially result in another risk to theatrical distribution. Sarandos has said that he believes movie going was an ‘outdated concept’.

Hollywood was created at the start of the nineteenth century. I believe we are now watching its demise and entering a new world.

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