The Topline
- Netflix announced last week its plan to acquire Warner Bros. Discovery (WBD) for USD $83 billion, putting Netflix and HBO Max – two of the world’s largest streamers – under the same ownership
- This week, Paramount mounted a hostile takeover bid for WBD by going straight to shareholders with what it called a superior offer of $30 per share in cash, valuing the company at around $108 billion
- The deal includes ownership of WBD’s TV and motion picture division, including HBO, HBO Max (no, they are not the same thing), and DC Studios content library, among other properties
Now streaming: fewer choices, higher prices
Canadians are no stranger to a lack of competition (cell phones, banks, airlines, on and on). What do they all have in common? High prices.
With or without this news, rates are almost certainly going up again, just like they always have. But once this deal closes, that’s one less place for streamers to take their money elsewhere.
Crave owns the Canadian rights to the HBO library, including The Sopranos, Game of Thrones and its spin-offs, and The Last of Us. Any impact to Crave may not be immediate since they signed a multi-year extension in 2024.
But, if Netflix ever pulls content back from Crave, let’s say on top of a rate increase, well, streamers get screwed.
At its heart, Netflix is a tech company. As reported in The Guardian , while Netflix denies directly commissioning films based on its algorithms, the company uses vast amounts of viewer data and complex classification systems to predict performance and guide decisions.
HBO, meanwhile, always positioned itself as the flagship company for premium content. HBO’s tagline, for years, was “It’s not TV, It’s HBO.” It was brand positioning that placed HBO above the vast array of channels at every consumer’s fingertips.
Just a few weeks ago, HBO Max CEO Casey Bloys told an audience of journalists, “[Netflix] is the basic cable of today, and in today’s world, consumers still want to add to their entertainment portfolio with must-have truly unique programming that only we can deliver,” he said.
Chris Perez, an entertainment lawyer, told The New York Times, “Where you only have a few buyers, they’d rather have something that’s less risky, and you get safer, less controversial content and less experimentation,” he said. “Consolidation has the potential to kill creativity.”
Put it all together, there’s a real risk that HBO’s brand of iconic, premium programming gets diluted by not only Netflix's data-driven approach to content creation, but also the fact there’s one less buyer competing for the edgier stuff that drives creativity forward.
That’s not even touching the impact this could have on cinemas.
Michael O’Leary, chief executive of Cinema United, a trade organization that represents 30,000 movie screens in the United States, called the Netflix acquisition "an unprecedented threat" to the global cinema business.
"The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world," he said.
Netflix insisted on Friday that it would honor WBD’s business model and continue to release movies in theatres for exclusive runs. “It’s not like we have this opposition to movies into theatres,” Ted Sarandos, Netflix’s co-chief executive, said on a conference call with investors.
But, he’s also the same guy who said at the Time100 summit back in April in response to declines at the overall box office: “What is the consumer trying to tell us? That they’d like to watch movies at home.” He also called theaters “an outmoded idea” for most people.
So where does that leave us? Facing higher prices, less creative content, fewer competitors and shuttered theatres, that’s what. Grrreeeeaaat.
Nothing suspicious to see here
The potential fallout to a Netflix acquisition is creative, but with a Paramount deal, the ramifications could be political.
The man behind Paramount’s hostile bid is Skydance CEO David Ellison , the son of Oracle billionaire Larry Ellison, who is a close ally of President Donald Trump’s. The junior Ellison founded Skydance with family money – the ultimate "small loan from father" success story.
Now, Trump is pledging to be directly "involved" in the regulatory review process, which traditionally operates independently from political whims… because nothing’s wrong with the president personally choosing which billionaires get to buy which media empires.
It gets better (worse). Trump’s son-in-law, Jared Kushner's private equity firm Affinity Partners is helping fund Paramount's bid.
This means that the Trump administration needs to approve any deal, and Trump's son-in-law – and former senior advisor to that same president during his first term – is helping finance it. That could mean the Trump family indirectly owns part of CNN's parent company.
The bid also is backed by the sovereign wealth funds of upstanding global citizens Saudi Arabia, Qatar, and Abu Dhabi. Paramount is assuring that foreign investors would forgo governance rights, but can we trust them?
In case you missed it: Earlier this year, Paramount paid Trump $16 million to settle a lawsuit with 60 Minutes, which Stephen Colbert then called a "big fat bribe" on air. Less than 48 hours later, Paramount cancelled "The Late Show," despite it being the top-rated program in its time slot. A few weeks later, Trump’s administration conveniently approved Ellison’s $8 billion Skydance-Paramount merger.
Now Ellison wants to buy WBD, and is using Jaren Kushner’s and MBS ’s money to help with that.
Let’s say the deal goes through. John Oliver makes fun of Trump, who texts Kushner, who calls Ellison, and rinse and repeat what happened to Colbert.
You get the idea.
