Bloomberg Technology anchors Ed Ludlow and Caroline Hyde reported on the colossal deal where Netflix agreed to purchase Warner Bros. Discovery for $72 billion, including a cash component of 27.75 per share for shareholders. When factoring in debt, the overall value of Warner Bros. Discovery reaches almost 83 billion. This acquisition marks a significant shift for Netflix, which has historically been known as "builders, not buyers". The company stated that this transaction is a "rare opportunity that will help us achieve our mission to entertain the world and bring people together through great stories". The deal is expected to close within 18 months.
Ed Ludlow detailed the structure of the deal, noting that Warner Bros. will spin off its cable networks (including CNN, PBS, and others) into a separate company. Netflix is specifically acquiring the Warner Brothers Studio and the HBO/HBO Max streaming business. This combination, as reported by Bloomberg Technology analysts, would give Netflix approximately 30% of the global streaming market, encompassing 450 million users worldwide. The financing for this deal, which involves $59 million from Wall Street banks, is not anticipated to be a major obstacle, as Netflix is expected to deleverage quickly given its robust balance sheet and billions in free cash flow.
Caroline Hyde raised questions regarding the competitive bidding process, noting reports that Paramount offered a higher $30 per share offer compared to Netflix's initial $28 per share. However, the actual value depends on the remaining cable networks being spun off, as Netflix is only purchasing two-thirds of the company. Some analysts speculate the remaining cable networks could be valued at four or five dollars a share, which would mean the Netflix deal is ultimately higher than Paramount’s.
Despite the strategic value of securing valuable assets and titles like Harry Potter and Friends, this merger faces what Ed Ludlow described as a "tidal wave" of opposition. Industry veterans predict this will be a prolonged battle that will "play out longer than Game of Thrones" due to antitrust concerns. The merger immediately sparked political backlash, with Senator Elizabeth Warren calling for the Justice Department to enforce anti-monopoly laws, labeling the merger a "nightmare".
Analysts predict the Justice Department will give the antitrust review a "wire brush treatment," noting that combining the number one streaming service (Netflix) with the number two service (HBO Max) creates "unmatched scale" and will inevitably raise regulatory concern.
The political complexity extends to prior takeover bids involving David Ellison, whose father, Larry Ellison, has a close relationship with Donald Trump, prompting speculation that the deal could face a new level of scrutiny from the Trump administration. Caroline Hyde pointed out the interesting dynamic of Netflix trying to "curry favor" with the Trump side, despite its leaders historically donating heavily to Democratic causes.
Furthermore, Caroline Hyde highlighted a key critique from industry experts: that Netflix’s biggest problem is not competition from streaming rivals like Amazon or Disney+, but the massive viewing time commanded by YouTube. Critics argue that acquiring established titles does nothing to address the "flood of creator content" driving viewership on YouTube, which has "almost double the viewing time" of Netflix right now. They suggest Netflix could have spent far less money to acquire a creator studio for a much larger long-term impact. Nevertheless, Netflix maintains the acquisition will strengthen the entertainment industry and provide complementary assets and more value for the consumer, potentially through bundling the services.
Ed Ludlow summarized the broad implications, confirming that analysts expect the transaction to be discussed for "months and years" to come. The core challenge remains how regulatory bodies will define the market: whether they look narrowly at streaming competition or broadly at all video content, including YouTube and TikTok. This deal could be viewed as one of the "last great media deals" before further industry disruption by AI.
