Image source, Bloomberg via Getty Images
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- author, Rachel Clune
- Author title, BBC Business Correspondent
Netflix has agreed to buy the film and television business My neighbor From Warner Bros. Discovery for $72 billion in one of Hollywood’s biggest recent deals.
Giant My neighbor Won the bid to buy Warner Bros. Against its competitors Comcast and Paramount Skydance, after a long battle.
Warner Bros. owns Franchises like “Harry Potter” and “Game of Thrones,” as well as a streaming service. My neighbor HBO Max.
The takeover would create a new giant in the entertainment industry, but the deal would still need approval from competition regulators.
Netflix co-CEO Ted Sarandos said the streaming platform My neighbor It was “very confident” that it would obtain the necessary regulatory approval and was working “full speed” to achieve this.
He stated that by consolidating Warner Bros.’s catalog of shows and films. With series from the live streaming platform My neighbor Like Stranger Things, “we can give audiences more of what they love and help define the next century of narrative creativity.”
“Warner Bros. defined the last century of entertainment, and together we can define the next,” he said.
When asked if HBO should remain a streaming service My neighbor Independently, co-CEO Greg Peters responded that Netflix believes the HBO brand is important to audiences, but added: “We think it’s too early to get into the details of how we’re going to tailor this show to consumers.”
Netflix estimates it will achieve savings of between $2 billion and $3 billion, primarily by eliminating overlaps in business and technology support areas.
Films produced by Warner Bros. will continue to be released in theaters, and the Warner Bros. TV studio will still be able to produce for third parties, he said. Netflix will continue to produce content exclusively for its own platform.
Sarandos called the event a “big day” for the companies and acknowledged that the acquisition may have surprised some shareholders, but it was a “unique opportunity” to set Netflix up for success “for decades to come.”
David Zaslav, chairman and CEO of Warner Bros., added that the deal would bring together “two of the largest entertainment companies in the world.”
Image source, Reuters
“By joining Netflix, we will ensure that people around the world continue to enjoy the most relevant stories for generations,” he said.
The deal is worth $27.75 per Warner Bros. share, and the total enterprise value – which includes the company’s debt and the value of its stock – is about $82.7 billion. The stock value, or cash price, is US$72 billion.
The boards of directors of both companies approved the agreement unanimously.
The acquisition of Warner Bros. is expected to allow Netflix to expand its studio production capacity and increase its investment in original content.
Netflix will complete the acquisition after Warner Bros. finalizes previously announced plans to spin off its television division. My neighbor Global networking studies in two companies next year.
Its global networks division will be renamed Discovery Global and will include its own cable channels, such as CNN and TNT Sports in the United States, as well as Discovery Channels and free-to-air channels in Europe.
Revolution in Hollywood
Paolo Pescatore, founder and tech media and communications analyst at PP Foresight, said the sale was “a great statement of intent, underscoring Netflix’s aspirations to become a global leader in the new world order.” My neighbor“.
However, he warned that while the “sudden action” makes sense for Warner Bros., it could “pose a headache for Netflix” when trying to merge the two companies, given the scale of the operation.
Although the agreement reached refers to a portion of Warner Bros.’s business, rival Paramount made an offer in October to buy the entire company, including its cable networks.
Warner Bros. refused. This offer is before it goes on sale.
Tom Harrington, director of television at analyst firm Enders, said it was difficult to assess whether the deal would be approved by regulators, but if it were finally given the green light, it would have a major impact on the film.
“If this is done, it will redirect Hollywood,” he said.
Harrington noted that there would likely be “significant cuts” to the new combined company’s television and film production, which would spark resistance from some sectors of Hollywood and related unions.
For consumers, Harrington said the merger would likely lead to higher prices.
“Netflix will become more expensive, and while HBO Max will close or become unnecessary, increased Netflix penetration of households will likely mean an increase in overall subscription revenue.”
Danny Hewson, director of financial analysis at AJ Bell, said Netflix had “made a peace offering” to Hollywood by promising to continue releasing Warner Bros. films. On the big screen.
“If this agreement can quickly overcome these important regulatory hurdles, significant cost savings are likely to be achieved,” he said.
“How much of this savings will be passed on to subscribers of streaming platforms?” My neighbor “Or whether Netflix will be seen as having too much pricing power is one question that will come under intense scrutiny in the coming months.”
With additional reporting from Natalie Sherman.
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