Netflix’s Fight for Warner Just Got Harder
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What recent acquisition did Netflix announce regarding Warner Bros.?
On Friday, there was big news in Hollywood. One media juggernaut, Netflix, announced it was buying another giant, Warner Bros. Discovery, for $72 billion.
The streaming giant will acquire Warner Brothers Film Studio and streaming service HBO Max. This is a deal that could reshape Hollywood. Comprising some of Hollywood's most prized movies and shows.
Look, this has seismic effects on the entire entertainment landscape.
How did Paramount Skydance respond to Netflix's acquisition of Warner Bros.?
But Netflix isn't the only company that's been courting Warner. Over the past few weeks, another massive entertainment company, Paramount Skydance, has also been in hot pursuit. And this morning, it went public with a hostile counteroffer.
Paramount launching a hostile takeover bid for Warner Brothers Discovery just days after Netflix announced an $83 billion deal to purchase the studio.
Paramount, it's not done. Paramount has upped its bid now for Warner Brothers. It is now offering all cash at $30 a share, a bid that it says is superior to Netflix's bid
This morning, I got on a call with my colleague Joe Flint, who's been covering every twist and turn.
And now it's kicked into Fifth Gear this morning. Fifth Gear was right around 6 a.m. my time, Los Angeles time, when Paramount officially launched their hostile takeover for Warner Brothers Discovery.
It's a heavyweight showdown between Netflix and Paramount over one of Hollywood's most storied companies. And no matter what happens, the business of Hollywood is about to change.
I'm sorry if there's a Paramount conference call in six minutes to talk about their hostile bid.
What factors led to Warner Bros. becoming a takeover target?
I'm guessing you probably need to be on that call.
I need to be on that.
Should we just get back on the phone when this call is finished?
Yeah, that'd be great. Appreciate it. It's part of your drama.
Exactly. This is going to be one of the cliffhangers. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. It's Monday, December 8th. Coming up on the show, the showdown over Warner Brothers.
Who is behind Paramount's bid for Warner Bros. and why now?
The company that's being acquired, Warner Bros. Discovery, is itself the product of a giant merger just a few years ago. In 2022, Discovery Networks, which owned a small streaming service and a bunch of cable channels, combined with Warner Media, which owned the Warner Bros. movie studio and HBO. When I got Joe back on the phone about an hour later, I asked him about the original vision for Warner Bros. Discovery.
How did David Zaslav respond to Paramount's unsolicited bids?
And the idea was that they'd have this supercharged streamer of the best of HBO, the best of Discovery. You'd have CNN in there, and then you'd still own these movie and TV studios, and it would be the ultimate Hollywood giant.
But instead of becoming the ultimate Hollywood giant, Warner Bros. Discovery stumbled. Joe says its CEO, David Zaslav, actually took on a lot of headaches. Its cable business was challenged by cord cutting, and building a streaming business was expensive.
What was Netflix's appeal in acquiring Warner Bros. assets?
The company was saddled with heavy debt and its stock price was in decline for much of its existence. So how did Warner Discovery become a takeover target?
Warner decided earlier this year to break itself into two separate companies. They were going to put the streaming and studios into one standalone company and then the cable networks such as CNN into another publicly traded company. The cable networks were seen as a drag on the Warner stock. So they thought that if they split the company apart, you'd have this one company that would have the movie studios and TV studios and HBO Max, all these sexy properties. And then the other company would have, you know, what is still a good cash business, but seen as a melting ice cube in the cable network universe. So they did that, and there was always an anticipation that doing that, when it was all done, there might be some interest from big players in buying those Hollywood entertainment assets.
But before Zaslav could split the company up, Paramount decided to pounce. And earlier this year, it put in several unsolicited bids to buy Warner. And not just one part, but the whole thing. So introduce us to Paramount.
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Chapters
8 chapters
1
What recent acquisition did Netflix announce regarding Warner Bros.?
0:03–0:39
2
How did Paramount Skydance respond to Netflix's acquisition of Warner Bros.?
0:39–2:00
3
What factors led to Warner Bros. becoming a takeover target?
2:00–2:45
4
Who is behind Paramount's bid for Warner Bros. and why now?
2:45–3:10
5
How did David Zaslav respond to Paramount's unsolicited bids?
3:10–3:39
6
What was Netflix's appeal in acquiring Warner Bros. assets?
3:39–5:14
7
What are the implications of the merger for Hollywood's future?
5:14–6:39
8
What will be the impact on consumers if Netflix succeeds in acquiring Warner Bros.?
6:39–17:24