News broke that Netflix beat out Paramount Skydance and ComcastUniversal and came out on top in the bidding war for Warner Bros. with a deal that would unite some of the biggest properties in entertainment, HBO and Netflix, under one roof.
If completed, this merger will hand Netflix control over some of today’s hottest film franchises, including Harry Potter, Batman, Game of Thrones and others, and would suddenly hurl Netflix into the world of theatrical releases..
Indeed, this deal will need to be approved by both U.S. and European regulators before the ink can be applied to the contracts.
Warner Bros. is first set to split its publicly traded halves next summer, a move that will give its film and streaming arms to Netflix while leaving the Discovery Global part — which contains publishing outlets and cable networks like CNN — on its own.
Democratic presidential hopeful former US vice president Joe Biden talks with moderators (L-R) Univision’s journalist Ilia Calderon, CNN chief Washington correspondent Jake Tapper and CNN political correspondent Dana Bash at the end of the 11th Democratic Party 2020 presidential debate in a CNN Washington Bureau studio in Washington, DC on March 15, 2020. (MANDEL NGAN/AFP via Getty Images)
In a call with analysts, Netflix co-CEO Ted Sarandos admitted that the deal was a surprise to many.
“I know some of you are surprised that we’re making this acquisition. And I certainly understand why. Over the years we have been known to be builders, not buyers,” Sarandos said, according to CNN. “But this is a rare opportunity, and it’s going to help us achieve our mission to entertain the world and to bring people together through great stories.”
He also noted that “many of these mergers haven’t worked” for past media consolidations, but added he feels his deal is different.
“A lot of those failures that we’ve seen historically is because the company that was doing the acquisition didn’t understand the entertainment business. They didn’t really understand what they were buying. We understand these assets that we’re buying,” he said.
He added that past mergers were made by companies that were already failing ahead of the mergers. Netflix, he said, is surging, not fading.
Agreement or not, though, the deal, has to pass regulatory muster in the U.S. first. And some are already raising alarms over it, including U.S. Senator Mike Lee (R, UT), who wrote in a post on X that the deal “should send alarm to antitrust enforcers around the world.”
But this deal does not have just U.S. political waters to navigate. The deal also has to pass muster with the regulators in the European Union.
The latter may pose less of a threat to the deal, though. Deadline reports that several experts have claimed that the EU will not likely oppose the deal, but will still ask for some concessions and “remedies” to their concerns.
“The EU never stops these deals. They always do access remedies,” European competition economist Cristina Caffarra told Deadline. “I’m not saying it will sail through, [but the process will be] saber rattling, remedy, clear.”
Whether it will be a cake walk or not, the deal will still need to be given the green light by European officials. And with the initial news of the deal just coming to light, no plans have been sent to the EU as of yet.
The EU will call for a “Phase II” investigation into the deal, a process that will take at least 90 days to complete once the final details of the acquisition are filed with them.
Some in the entertainment industry are also raising the alarm over this deal. On Thursday, radical leftist actress Jane Fonda published an op-ed under her name that claims a Warner Bros. deal actually threatens free speech and democracy itself.
Others are also worried. CNN reported that Cinema United, a trade association representing movie theater owners, is warning that the deal “poses an unprecedented threat to the global exhibition business” given Netflix’s past dismissive ideas on theatrical releases.
Whatever else happens with the Netflix-Warner Bros. deal, it will all be under close scrutiny from a number of sources before all is signed, sealed, and delivered.
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