Netflix has announced plans to acquire Warner Brothers Discovery’s movie studio and HBO streaming networks in a staggering $72 billion (£54 billion) deal. Here’s how this one huge acquisition could change the entertainment landscape. It would put hugely popular franchises such as Harry Potter and Game of Thrones under the Netflix umbrella. And now U.S. president Donald Trump is publicly inserting himself to warn of the merger’s dangerous implications. The announcement comes as he is under mounting pressure related to the matter.
Netflix originally launched as a mail order DVD rental service back in 1997. Since then, it has become the world’s leading subscription streaming service. Their growth as a company has been incredible, seeing them shoot straight to the top of the company’s industry leading the entertainment world. Yet according to Trump’s own comments, it seems that he thinks that this deal might have serious repercussions.
Speaking at an event in Washington D.C. on Sunday, Trump lamented that Netflix and Warner Brothers Discovery had gotten too large. He believes that their cumulative size is nothing to celebrate. He stated that the merger could lead to potential antitrust issues, emphasizing that “the world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.”
The significance of this deal goes beyond issues of corporate competition. The East and West branches of the Writers Guild of America released a scathing statement. They raised the alarm that the merger would result in greater job loss, wage suppression, and deteriorating work standards for entertainment industry workers. As we discussed at the time, they cautioned that this regulatory shift would increase costs to taxpayers. Fourth, it would drastically limit the diversity and amount of content that reaches their viewers.
In spite of the uproar over the purchase, Netflix’s co-CEO Ted Sarandos conceded that the deal came as a shock to investors. As he elaborated here, the deal is not just an escape hatch but Netflix’s chance to cement its status as the indispensable player moving forward. Sarandos remarked that this partnership could set Netflix up for “decades to come,” suggesting a strategic vision behind the acquisition.
Trump further emphasized his desire to insert himself into the micro-level calculus of whether or not to approve the deal. He reiterated his conviction as to the strength of Netflix’s market position. To that end, he said, the company has a “huge market share” in the “robotics space.” His comments point to larger fears over concentration and competition in the media industry.
“I have a lot of respect for him. He’s a great person.” – Donald Trump
“He’s done one of the greatest jobs in the history of movies.” – Donald Trump
Conversations surrounding this monumental acquisition are just getting started. There’s no denying that Netflix’s proposed mega-merger with Warner Brothers Discovery would have consequences across the board. The latter is where the most fireworks may explode, with industry analysts closely watching as these historic roll-up duos unfold, especially as regulatory bodies assess antitrust ramifications.