Why Everyone Is Talking About Netflix Acquiring Warner Bros. Discovery
Photo Credit| John-Mark Smith (Netflix Image) and Christopher Yarzab (Warner Bros. tower)
This deal significantly impacts the film industry, giving the streaming service a lot of power over Hollywood’s key intellectual property
I remember in college, Netflix was taking off with its DVD rentals. Blockbuster had sadly gone out of business, and there was Red Box (there still is) but with Netflix, you could sign up for their $8.99 a month membership, pick the DVD’s you wanted and receive and return via the post. It made for cozy Friday night’s in with fellow college girlfriends. Who knew Netflix would turn out to be so relevant in the film industry. I would have never thought Netflix would be what it is today, back then in 2008.
Obviously, its founders and leadership have been very aggressive in laying out the company’s vision. It goes to show the importance of just doing, just starting that business, and with the right vision, it could turn out to be something massive. Twenty-eight years after its founding, Netflix has just done media’s biggest deal in history, acquiring Warner Bros. Discovery for $72 billion (in equity value) with a total economic value of the company being $82.7 billion.
Hollywood has drastically changed since Covid with the rise of streaming services, and their subsequent strikes (like the 2023 union strikes). And in all this, Netflix has gone from mailing DVDs to its subscriber base, to maintaining its current streaming base, and inheriting an even larger subscriber base with this deal. Fairly straightforward, this deal is expected to close in 12-18 months, where Warner Bros. Discovery shareholders will receive $27.75 cash in Netflix stock per share (subject to a collar).
According to a LinkedIn post by Saudi media and brand stagiest Zeina Tabbara, this media deal matters because:
A historic content consolidation: Netflix's global platform meets Warner Bros.! century of intellectual property - from DC Comics (Batman, Superman, Wonder Woman), Harry Potter, The Sopranos, Friends, to Game of Thrones - creating one of the deepest libraries in entertainment.
HBO joins Netflix: Netflix plans to keep Warner Bros!' operations intact, including theatrical releases, and fold HBO/ HBO Max into its ecosystem.
Bigger offering for consumers: More premium titles, more bundled value, and more flexibility in how Netflix structures its subscription plans.
Stronger studio muscle: The deal boosts Netflix's U.S. production capacity and long-term investment in originals, with expected $2-3B in annual cost synergies by year three.
Creative upside: Talent gains access to both Netflix's global reach and Warner Bros! IP library — a major expansion of storytelling opportunities.
Shareholder value: Netflix expects the deal to drive subscriber growth, engagement, and revenue, and to be accretive to EPS by year two.
Paramount, Skydance, and Comcast also cast their bid for the deal, but lost. TNT Sports, TBS, Discovery Channel, Discovery+, and CNN TV networks will be spun out in this deal before it closes. In essence, this deal will cement Netflix as streaming king, most likely putting an end to the film industry’s streaming wars of late.
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