MELBOURNE: Netflix’s plans to acquire Hollywood studio Warner Bros. Discovery have fallen through at the last minute, as Paramount Skydance has made a “better” offer to buy the group for A$156 billion.
Although the companies’ independence following the acquisition is unclear, Paramount Skydance CEO David Ellison has already discussed plans to merge the portfolios of streamer Paramount and HBO Max to compete with Netflix.
Netflix withdrew from the process after Paramount Skydance’s proposal. It said WBD was “a ‘nice to have’ at the right price, not a ‘must have’ at any price”.
Who were the winners and losers in this highly competitive bidding war? And what will happen next?
Winner #1: David Zaslav, CEO of Warner Bros. Discovery
Longtime Discovery Cable Networks CEO David Zaslav is set to merge his company with Warner Bros. in 2022 to create Warner Bros. Discovery.
The merger also saw the combination of Discovery’s reality content, Warner Bros.’s film library, and HBO’s quality TV series on streaming service Max to challenge Netflix.
But Max didn’t live up to its name, as viewers of HBO originals like The White Lotus showed little interest in Discovery shows like Dr. Pimple Popper.
Unable to significantly increase WBD’s share price, Zaslav initiated a plan to separate failing cable properties such as Discovery from streaming growth areas such as HBO Max, in preparation to sell the company.
Despite Zaslav facing continued criticism, his move was successful and attracted high bidders for the WBD. If the Paramount deal goes through, Zaslav’s individual WBD shares and equity would be valued at US$790.5 million.
Zaslav, who recently extended his WBD contract until 2030, will be a key figure in the transition, but his role following the sale is unclear.
Winner #2: David Allison
David Ellison is the head of Skydance Media and the son of Oracle co-founder Larry Ellison, one of the richest men in the world. Ellison’s Skydance Media to acquire struggling Paramount Studios in 2024.
While Paramount has some iconic IP like Star Trek, Captain Kirk is no match for Warner Bros.’s cross-generational franchises – including Harry Potter, Batman and Looney Tunes.
Contributing to Warner’s iconic film library, premium HBO shows, and news power ranging from CNN to Skydance Corporation, David Ellison is poised to become one of the most powerful people in traditional media.
Winner #3: Donald Trump
Donald Trump is an old friend of Larry Ellison. US Federal Communications Commission Chairman Brendan Carr has openly praised CBS’s conservative direction since David Ellison took over parent company Paramount. Trump vowed to stay out of the WBD sale.
Meanwhile, Netflix CEO Ted Sarandos was questioned by Republican senators earlier this year over Netflix’s “woke” content. This Senate hearing appears to be setting the stage for a challenging regulatory process for Netflix to obtain WBD.
While Netflix was facing political opposition, David Ellison was Republican stalwart Lindsey Graham’s guest at Trump’s State of the Union address. Thus, WBD shareholders were assured that the Paramount deal had Trump’s tacit approval.
Winner #4: Netflix
Netflix’s stock fell sharply after announcing plans to acquire WBD in December.
Investors were nervous about this unprecedented purchase, by a company whose playbook was “builders rather than buyers”.
The news that Netflix is ​​pulling out of the WBD sale has seen shares of the streaming giant surge. The company will also receive a US$2.8 billion termination fee paid by Ellison’s Skydance. Netflix will definitely not leave this process empty handed.
Loser #1: The Creative Community
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Despite concerns regarding Netflix’s acquisition of Warner Bros. Discovery, there was comparatively little overlap between the companies. Unlike WBD, Netflix does not own linear and cable stations, do not produce films for cinemas, or have a news division.
However, Paramount and WBD, albeit on different scales, are almost identical companies. The joining of these two Hollywood studios would enable what Ellison described as “synergies” – this being interpreted as thousands of jobs being lost due to the merger and cutting of duplicate departments at both companies.
Loser #2: The audience
Ellison promised to run Warner Bros. and Paramount Film Studios independently and produce 30 films each year for the cinema.
Audiences had similar expectations before Disney’s acquisition of 20th Century Fox in 2019. But since that deal, Disney and 20th Century’s combined theatrical output has declined 46%. A similar decline could occur if Warner Bros. and Paramount came under the same corporate umbrella.
Furthermore, while Ellison has produced dozens of films under Skydance Media, they’ve been a mixed bag – every crowd-pleasing with a nod to Top Gun: Maverick for Geostorm.
Conversely, Warner Bros. is coming off a year-long hot streak with Sinners, One Battle After Another, and Weapons. Will such writer-driven films be made under the leadership of David Ellison?
Loser #3: Journalism
Paramount’s acquisition of Skydance in 2024 resulted in editorial changes in the company’s news division, as conservative political commentator Bari Weiss was brought in as editor-in-chief of CBS.
Senior CBS news producers have complained of “political bias” in the coming months, with veteran broadcaster Anderson Cooper announcing he is leaving CBS’s flagship news show 60 Minutes amid the turmoil.
There are concerns that a similar conservative agenda could be brought to the WBD news network CNN, leading to more ideologically driven programming in America’s major news networks.
what comes next?
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European and US lawmakers will review the deal as concerns remain over the merger of two of the five remaining Old Hollywood studios.
Nonetheless, much of the opposition to the Netflix deal arose from the combination of the world’s first and fourth largest subscription video-on-demand services. Since Skydance’s Paramount is a smaller streamer, the company doesn’t face the same anti-competitive arguments as Netflix.
It’s likely that “A Skydance Corporation” will be written below the Warner Bros. logo when The Batman: Part II hits theaters in 2027. AIIMS
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