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Netflix announces a deal to buy Warner Bros. Discovery in an $83 billion monster agreement. But some industry groups are opposed to the massive merger.
On Friday, Netflix announced a definitive agreement to acquire Warner Bros. Discovery, including its film and television studios, HBO Max and HBO, with a whopping $82.7 billion valuation. If approved by regulators, the merger would place two of the world’s largest streaming services under one roof.
Warner’s cash and stock are valued at $27.75 per share, with a total enterprise value of $82.7 billion, including debt, and an equity value of $72 billion. The deal is expected to close in the next 12 to 18 months after Warner completes the previously announced separation of its cable operations. Notably not included in the deal are networks like CNN and Discovery.
But the proposed merger is already drawing intense antitrust scrutiny, especially for its effect on streaming services.
“Netflix is the top streaming service today,” said Mike Proulx, vice president and research director at market research company Forrester. “Now combined with HBO Max, it will absolutely cement itself as the Goliath in the streaming industry.”
Meanwhile, the Writers Guild of America (WGA) has joined other industry groups in speaking out against the proposed deal. The WGA specifically warned that such a merger would eliminate jobs, reduce wages, and raise prices for consumers.
“The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent,” said the guild in a statement. “The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers. Industry workers along with the public are already impacted by only a few powerful companies maintaining tight control over what consumers can watch on television, on streaming, and in theaters. This merger must be blocked.”
Other Hollywood industry groups opposed to the takeover include the Producers Guild of America (PGA), the Directors Guild of America (DGA), and Cinema United, the theater industry trade group formerly known as the National Association of Theater Owners.
“As we navigate dynamic times of economic and technological change, our industry, together with policymakers, must find a way forward that protects producers’ livelihoods and real theatrical distribution, and that fosters creativity, promotes opportunities for workers and artists, empowers consumers with choices, and upholds freedom of speech,” reads the PGA’s statement. “This is the test that the Netflix deal must pass. Our legacy studios are more than content libraries—within their vaults are the character and culture of our nation.”
“We believe that a vibrant, competitive industry—one that fosters creativity and encourages genuine competition for talent—is essential to safeguarding the careers and creative rights of directors and their teams,” said the DGA. “We will be meeting with Netflix to outline our concerns and better understand their vision for the future of the company. While we undertake this due diligence, we will not be commenting further.”
“The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business,” said Michael O’Leary, CEO of Cinema United. “The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world.”
Netflix said it plans to maintain Warner Bros.’ current operations, including continuing to release Warner Bros. films in theaters. The streamer also indicated it would keep HBO Max as a “discrete service,” at least for now.
“For more than a century, Warner Bros. has thrilled audiences, captured the world’s attention, and shaped our culture,” said David Zaslav, CEO of Warner Bros. Discovery. “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”
“Our mission has always been to entertain the world,” said Ted Sarandos, co-CEO of Netflix. “By combining Warner Bros.’ incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane, to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters, and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”
