Netflix Nears Warner Bros Deal: Is a Streaming Shake-Up Ahead?

A major takeover battle is happening in the entertainment industry, and it’s starting to feel like something straight out of a movie.

Netflix is reportedly close to buying the film and streaming divisions of Warner Bros Discovery. Several major news outlets say Netflix has made the strongest offer so far, bidding $28 per share to snap up the parts of the business that are performing well.

Meanwhile, Paramount has also tried to make a move. Their earlier offer of $24 per share was rejected, and although they came back with a higher bid of around $27, their plan involves buying the entire company, including areas that have been losing money. That makes their offer a much bigger and riskier deal.

Picture Source: TechRadar

Paramount’s lawyers are now arguing that the sale process is not fair, claiming Warner Bros is favouring Netflix. They have even suggested that Netflix’s offer is worse for shareholders because it would require the company to be broken up.

So why does this matter?

Warner Bros owns some of the biggest franchises on the planet, think Harry Potter, Game of Thrones, DC films, and its streaming platform HBO Max. If Netflix ends up owning these, it would massively boost its content library and give it even more power in the global streaming market.

But big deals like this do not always get the green light straightaway. Emma Wall, a chief investment strategist, told the BBC that US regulators will almost certainly step in. A takeover of this size could create a huge entertainment powerhouse, and competition regulators will want to check that it does not reduce competition or harm consumers.

In simple terms:

• Netflix wants the profitable parts of Warner Bros.

• Paramount wants the whole thing.

• Lawyers are arguing.

• Regulators are watching.

• And the future of the streaming world could be about to change.

Questions for business students to consider:

1. What might be two benefits of this takeover for Netflix or Warner Bros shareholders? (Think about increased content, higher profits, stronger market position, or economies of scale).

2. Why might US competition regulators step in to investigate or challenge this takeover? (Consider the size of the companies, the impact on competition, and the risk of one firm becoming too dominant).

Extension: Explain how consumers could be affected if Netflix becomes even more powerful in the streaming market?