Netflix and Warner Bros. announced an agreed upon $82.7 billion merger, becoming the latest major entertainment companies to join forces. How do these continued consolidations in the entertainment industry impact consumers?
Netflix-Warner Bros. deal
The blockbuster deal between the two will still require federal regulatory approval, which could take more than a year to finalize and could face some blowback.
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“[The deal] faces some stormy regulatory waters ahead, both in this country and the EU,” Jonathan Handel, an entertainment attorney, told Straight Arrow News. “I think that even a non-politicized regulatory environment would involve some raised eyebrows at the world’s largest scripted streaming operation bulking up further and acquiring one of the oldest movie studios in existence.”
Hollywood has pushed back on the deal with statements from the Screen Actors Guild, Writers Guild of America, and the Directors Guild of America all putting out statements voicing their concerns.
It follows major media mergers in the past few years, including Paramount and Skydance, Amazon and MGM and Disney and 21st Century Fox.
“It’s somewhat inevitable,” David King, management professor at Florida State University, told SAN. “Someone’s going to end up purchasing Warner Brothers because it’s not really viable on its own. So, it’s kind of an inevitable evolution of how industries progress. They turn into conglomerates.”
What it means for you
The first question likely on many people’s minds is “What will this do to my subscription prices?” With Netflix and HBO Max now under one roof, could you see a cheaper bill?
“If you think your prices are going down, you’re living in fantasy land,” Handel said. “Prices will go up, and the justification will be that we’re bringing you more content.”
Handel added that eventually there’ll likely be some kind of bundle offer, like what Disney offers for Disney+, Hulu and ESPN.
“I don’t see why Netflix ultimately would want to maintain two services,” Handel said. “What’s the point of that? The HBO identity, the brand name, would certainly remain as a label within the Netflix screen on Netflix user interface and user experience, but I don’t see those services being operated separately indefinitely into the future.”
Many people have voiced concerns on social media about the impact of this deal on the theater experience. Netflix has historically released most of their original films only on the streaming platform.
“There’s just got to be a little level of concern, particularly since Netflix has not been a theatrical-friendly destination for projects,” Handel said. “They really don’t like releasing things theatrically.”
Warner Bros., of course, has a long history of major theatrical releases. Netflix co-CEO Ted Sarandos said he plans to continue releasing the studio’s films in theaters.
“Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films,” Sarandos said, according to The Hollywood Reporter.
“Promises have a shelf life,” Handel responded.
Content impact
Netflix and HBO both produce a significant amount of their own content. Once the merger’s finalized, that will take one major competitor for movies and shows off the market.
“It reduces the number of buyers for content,” Handel said. “In other words, places that a producer or a director, or writer, can sell their services.”
The new combination will likely bring more eyes to Netflix platforms, and thus, more data on what people are watching.
“They’ll have the algorithms based on what people are watching to be able to predict what’s going to be profitable,” King said. “And they’ll probably crank out more content.”
Several major Hollywood players have shared their concerns over what this merger means for content. That includes James Cameron, the second most profitable director in box office history, who called the merger a “disaster” and doesn’t believe Warner Bros. movies will continue to have prolonged theater runs.
Warner Bros. also owns several networks including CNN, but The New York Times reported the news network will not be a part of the sale.
What comes next?
Experts SAN spoke with said consolidation is likely to continue in Hollywood.
“If you’re Comcast, operating Peacock, what’s the point when everyone is larger?” Handel said. “How do you keep operating that by itself?”
King also used Peacock as an example.
“NBC, Peacock or AMC are kind of left watching these large competitors — Disney, Amazon and Netflix — and they’re gonna have to make adjustments,” King said.
For those who work in the industry, changes could be imminent.
“The bulk of people who get affected by corporate decisions in Hollywood are middle class and in some cases, working class or borderline working class,” Handel said.
