An (entirely proverbial) earthquake just struck Hollywood.
What happened: Netflix is acquiring Warner Bros. Discovery (WBD) for US$82.7 billion, which, minus debt, values the studio at $72 billion. If the deal passes, it would put countless beloved properties under Netflix’s roof, as well as streaming rival HBO Max.
Netflix outbid other companies including Comcast and Paramount, the latter of which had already finalized an $8 billion deal earlier this year to acquire Skydance Media.
It’s unclear how this deal would affect Canada, where Crave has a multi-year deal to stream HBO content and other WBD productions, like Harry Potter and DC movies.
Why it matters: The deal would completely upend the film industry. According to analyst Jessica Reif Ehrlich, Netflix would become “the undisputed global powerhouse of Hollywood“ with a “content moat” that would end the streaming war, and an economic model that will likely kill legacy mid-sized studios.
Movie theatre operators are also up in arms. While Netflix promised to keep putting out Warner films theatrically, CEO Ted Sarandos hinted at shorter release windows.
Yes, but: Getting the deal through regulators will be a Herculean challenge. Especially since the U.S. likely wants to see WBD owned by Paramount, a studio run by the son of Trump loyalist Larry Ellison, which has been an active collaborator in Trump’s cultural agenda.
Our take: Want to see the future of movies? Look no further than Space Jam: A New Legacy, in which Warner leveraged its vast archive of film history so LeBron James and Yosemite Sam could appear in Casablanca. If the deal goes through, Netflix is about to do the same thing, but on a much larger scale.—QH