The merger of Netflix and Warner Bros. Discovery Channel (WBD) has caught the attention of analysts around the world, but there are several big question marks surrounding its impact.
Enders Analysis media and telecoms analyst François Godard issued a stark warning about the deal, which has been confirmed in the past few minutes and would see Netflix acquire the company behind Hollywood Studios, among others. succession and harry potter Movies with a total enterprise value of $82.7B.
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“My first reaction was, look out, Netflix,” he said. “The Warner Bros.-Discovery merger destroyed value, and the risk is that this new deal will also produce results that are less than the sum of its parts. HBO, the most brilliant creative company in television, survived under Zaslav, but will it die under Netflix?”
Guy Bisson, executive director of Ampere Analysis, took a more positive stance, calling the deal “big news, but not unexpected.”
“It’s clear to me from what Ted Sarandos said in last quarter’s results that WBD is a priority for Netflix,” Beeson added. “It makes a lot of sense, Netflix has been moving heavily in the direction of vertically integrating studio operations for years. This deal takes that to the next level, with a set of IP that would have taken decades to build on its own, and it’s not going to go unnoticed that HBO content is doing really well on Netflix.”
strategic complexity
Jack Davison, executive vice president at U.K. analyst 3Vision, said there are a number of strategic complexities in the deal, with Netflix largely avoiding theatrical releases as much as possible and Warner Bros.’s business model still being closely tied to it. Likewise, TV distributors and movie sellers will be wondering what will happen to their agreements with Netflix and HBO Max.
“It raises a lot of questions about what Netflix is going to do with the IP and catalog that they’ve acquired, in terms of the theatrical strategy for movies — does it maintain a limited interest in that? — and the activity of any third parties with everything else,” Davidson said. “Will everything end up being focused on Netflix? There are going to be a lot of global video service providers wondering what happens next with their proposals because that’s going to have an impact on a lot of them.”
