In a move that could dramatically alter the entertainment industry, streaming giant Netflix announced plans Friday to acquire Warner Bros. Discovery’s (WBD) studio and streaming assets for $82.7 billion.
The acquisition, which is still subject to approval from federal regulators, could shake up the media landscape. With more than 300 million subscribers, Netflix would add WBD’s assets – which include popular franchises like Harry Potter and the DC Universe – and further its dominance in the streaming industry. The move creates a consolidation of power that could hurt competitors such as Disney and Amazon.
While Netflix pledges to continue theatrical releases, it remains to be seen how the entire moviegoing experience could change if the acquisition is approved.
Florida State University’s David King is the Higdon Professor of Management in the College of Business. Among his many areas of expertise is merger and acquisition (M&A) integration and performance. His research also focuses on complementary resources, technology innovation and defense procurement.
King has produced several journal articles on M&A integration and performance and has appeared on many media outlets including NPR, ABC, Inside Higher Education and more.
Media inquiries on Professor David King’s analysis of the potential Netflix acquisition of Warner Bros. Discovery can reach out to him via email at dking@business.fsu.edu.
David King, Higdon Professor of Management, FSU College of Business
What are some likely outcomes of Netflix’s planned purchase of Warner Bros. Discovery?
Three likely outcomes could occur:
1. The acquisition is consistent with consolidation (e.g., Disney acquiring Fox; Amazon acquiring MGM), and it would solidify Netflix’s position as the market leader in video streaming. The acquisition will also allow Netflix to reduce costs by eliminating duplicate production facilities and give it a broader library of intellectual property (e.g., Harry Potter, Game of Thrones, DC Universe, White Lotus) for streaming existing content and developing new content.
2. Regulatory review: The merger’s size and other firms interested in purchasing HBO Max assets will drive regulatory review due to concerns over price increases to consumers and impacts on competition. Netflix has already indicated that it plans to divest TV stations owned by HBO Max, and there will likely be protests from other firms, such as Paramount that may lead to additional conditions for merger approval.
3. Movie releases: The long-term trend of video content being provided through streaming may accelerate with fewer movie releases being shown in movie theaters before streaming.