Warners Bros. Discovery (WBD), the beloved producers of countless classics including the “Harry Potter” franchise, “Friends,” and “Game of Thrones,” has decided to sell its streaming assets, sparking a bidding war between Paramount and Netflix.
WBD was drowning in $53 billion worth of debt after a failed merger with Discovery Media in 2022, which left the company in disorder. WBD’s production continued to thrive, though, regardless of their financial crisis. Both Paramount and Netflix leaped at the opportunity to save WBD’s company and its assets.
Netflix’s offer valued WBD at $27.75 per share for the Warner Bros. Discovery studio and streaming assets, while Paramount bid $30 per share for the entirety of Warner Bros. Discovery. WBD has accepted Netflix’s offer, but Paramount is not backing down yet. After hearing word of WBD’s new alliance with Netflix, Paramount made a hostile takeover bid for Warner Bros.
“In corporate deals, a hostile takeover is when a company moves to acquire another firm without the consent of the target company’s management, typically by offering to buy its target’s shares,” BBC Business Reporter Natalie Sherman said in an article. “It differs from a friendly takeover-one that is mutually agreed upon by the boards of directors and shareholders at both companies.”
Netflix has yet to respond to Paramount’s hostile takeover, but Netflix’s owners are feeling confident that WBD belongs in their hands.
“Together, we can give audiences around the world even more value and choice, and get one step closer to being the most loved and the most valued entertainment company,” Netflix co-CEO Ted Sarandos said in a press release, interpreted by business insider, when announcing this deal.
Similarly to Disney’s acquisition of Fox in 2019, Netflix’s acquisition of WBD will mean an increased monopolization of streaming service companies. By combining one of the most renowned production companies with the most popular streaming service platform, Netflix’s competition in the streaming service industry would be limited.
“The deal would undoubtedly create the most powerful entertainment conglomerate in modern media history,” businessman Corey Martin said in an article with Forbes. “In fact, a combined Netflix–WBD would reshape the entertainment landscape, creating a streaming powerhouse with unmatched subscriber scale, studio assets, and global distribution.”
Netflix currently has the highest subscriber count of any streaming service. If Netflix can pull off this collaboration with WBD, their large subscriber platform would only expand even more once Netflix gets hold of WBD’s popular franchises like “The Matrix” or “Batman.” The amount of content on Netflix would increase so drastically that no other streaming service company, like Disney or Amazon, would make nearly as much profit.
Netflix’s domination of the streaming service industry is the next step to becoming the sole streaming service provider in the nation. When industries monopolize, the buyers are the ones who face repercussions because companies, like Netflix, can charge higher prices that buyers are forced to succumb to as there are no other alternatives in the industry.
“By fixing prices and muscling out competitors, Netflix, the nation’s number one streamer, has raised prices 125% in the past decade,” economist David Dayen said in an article with The American Prospect. “You can bet it will continue that trend if it gets HBO Max, the number three streamer, in its fold.”
Time will tell if the deal goes through and what this will really mean for Netflix, competing streaming services, and Netflix’s users. While Netflix will be able to add a much wider variety of movie and TV show options, the monopolization of the streaming service industry may come at an unexpectedly high cost for consumers.
“The merger is certainly bad because we need a competitive marketplace,” AP Econ teacher William Slook said. “In the long run, the consumer will be ripped off by this deal.”
