Netflix to Acquire Warner Bros. Discovery

 It is now apparent that Netflix, assuming it obtains regulatory approval, will purchase Warner Bros. for $82.7 billion. 

President Trump and Ted Sarandos of Netflix

This would indicate that the world's largest entertainment streamer (YouTube is the largest media streamer) would now own one of Hollywood's oldest studios.

Ted Sarandos, Netflix Co-CEO, recently met with President Trump for a two-hour lunch, presumably regarding the Warner's purchase. "We're highly confident in the regulatory process", says Sarandos. "This deal is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth. Our plans are to work closely with all the appropriate governments and regulators, but we are really confident that we're going to get all the necessary approvals." 

On the flip side, Hollywood's most powerful media producers are strongly against the Netflix purchase. Unions and guilds representing directors, writers, producers, casting directors, and actors expressed deep concern. A spokesperson for the Writers Guild stated, "This merger must be blocked. It's the world's largest entertainment streamer purchasing a major competitor - isn't this what antitrust laws were designed to prevent?" 

I think the odds favor a purchase, but Netflix may not be the acquirer. The Trump Administration may not want to appear to be anti-Hollywood, or worse, anti-worker, so Netflix's road to success will be rocky 

To make matters more interesting, Paramount launched a hostile bid of $108.4 billion for Warner. Owned by Skydance, which recently acquired Paramount, they have put forth a much higher bid vs. Netflix. Their bid includes funding from Saudi Arabia and Qatar, with loans secured by Bank of America and Citibank. 

Hollywood would much prefer the Paramount purchase, but there is strong support for the Netflix deal by Congressional Democrats, who issued a statement saying, "the Paramount transaction has national security issues because of the reliance on funding from foreign-based financiers." That's a dumb argument. 

I believe the Paramount deal is more favorable to Hollywood, as there would be little conflict with theatrical movie releases and early content streaming.  

According to Polymarket (the world's largest prediction market), Netflix only has a 17% chance of closing the Warner's acquisition. I agree. 

By: Jim Lavorato