By Gavin Boyle
Mega-deals are nothing new in the entertainment industry, and if history has any say on the Netflix, Warner Bros. merger, this deal might result in nothing but a weaker industry overall.
“The media industry should be embarrassed for their lack of imagination, buts and strategic thinking,” MoffettNathanson analyst Michael Nathanson recently wrote, per Variety. “Time Warner had all the pieces to create the next great online business, the next great video streaming platform and even the next great audio company. What they had in world-class assets, they sorely lacked in managerial discipline, technology skills and an investor base willing to suffer deep losses to build these assets.”
https://www.instagram.com/reel/DR5ODiGElBp/
Related: How Will the Paramount-Skydance Merger Affect You?
This failed business is the Warner Bros. Discovery of today which decided it was better to split into two companies to solve its debt problem, rather than find a real solution. This split, which was planned to take place early next year, set the stage for the bidding war over what would remain at Warner Bros., leading to Netflix’s winning bid of $82.7 billion.
While this upcoming merger was only announced in the past week, it is already facing extreme scrutiny from federal agencies that would need to approve the deal, along with competitors in the industry that claim it would lead to a monopolistic enterprise.
The key to getting the deal through could ultimately depend on President Trump who holds sway at the FCC. Earlier this year, SkyDance media was able to complete a blocked merger with Paramount after appealing to the president.
Beyond legal hurdles, the merger has also been scrutinized by Netflix shareholders who understand that the deal would completely rewrite Netflix’s business strategy. The company’s stock price has fallen nearly 6% over the past week as investors fear that this shift could undercut Netflix’s past success. For example, Netflix has long shunned theatrical releases, but a continued commitment to theaters with Warner Bros. content would likely be required for the merger to be approved.
“There’s no change in the strategy,” Netflix co-CEO Ted Sarandos said during a Q3 earnings call when asked about Netflix’s approach to theatrical releases. “Our strategy is to give our members exclusive first-run movies on Netflix.”
Thus, Netflix may only suffer as a result of this merger, especially if it goes the way of similar past deals and is unable to produce the gains required to justify Warner Bros. $82 billion price tag. However, only time will tell if Netflix will even be given the chance to try, or if outside obstacles will cause the merger to fall apart.
Read Next: Do You Want to See More Netflix Movies in Theaters? You Might Soon
Questions or comments? Please write to us here.
– Content: +1Share:
– Content: +2