- Netflix agrees $72 billion deal ($82.7 billion including debt) to buy Warner Bros Discovery
- The deal could see a host of valuable IP come to Netflix, including the likes of Harry Potter and HBO favourites The White Lotus and Game of Thrones
- Still regulatory hurdles to clear before the deal goes through
Danni Hewson, AJ Bell head of financial analysis, comments:
“Netflix had quickly emerged as the frontrunner to take over the ailing Warner Bros Discovery’s film and TV studios, so it came as no big surprise to learn it had got the $72 billion deal over the line. But the handshake is the easy bit, getting it past regulators is likely to be considerably more difficult, especially when you consider the political temperature.
“Paramount Skydance – owned by David Ellison, one of Donald Trump’s biggest supporters – had been one of the rival suitors hoping that its bid to take over the whole kit and caboodle might win over the board.
“It could also be argued that Netflix is picking off the cherry on top of the Warner Bros empire and leaving the problem of what to do with the cable networks to someone else once that part of the business is spun off.
“For Netflix, the benefits are obvious. Adding the likes of Game of Thrones, Harry Potter and the DC Universe to its roster of content is a huge win, as is snapping up all those streaming subscribers that currently plump for HBO Max.
“Netflix has offered an olive branch to a nervous Hollywood, with promises to keep releasing Warner Bros studio films on the big screen. It might be a streaming behemoth but it’s also a disrupter, a relatively new kid on the block that was once looked down on by the boss of the very studio it’s now going to own.
“Netflix is a business that grew out of good old-fashioned movie watching via a mail order DVD service. It understands entertainment and how best to capitalise on its estate and has taken a great deal of notice of how those legacy giants do business, even if it puts its own unique spin on things. It’s branching out into theme parks, covets those little gold Oscar statues, and it wants to do what every industry insider wants – to entertain its audience, no matter how they choose to view.
“Splashing out so much cash was never going to make the share price jump with delight, but if this deal can clear those significant regulatory hurdles quickly there are likely to be considerable cost savings to be made. How much of those savings get passed to streaming platform subscribers or whether Netflix will be seen to have too much pricing power is one of the areas that will face a huge amount of scrutiny in the coming months.”
