WBD has selected Netflix after the streaming giant offered $30 a share for the studio and streaming assets, according to two people familiar with the deal talks. The deal also includes a $5 billion break-up fee to match the terms that Paramount added with its bid.
While its unclear what the makeup of the new bid looks like, the prior bid was a mix of mostly cash and stock.
Netflix securing a win over rival suitors Paramount and Comcast represents a stunning turnaround from just two months ago, when co-CEO Greg Peters shaded big media mergers as not having an “amazing track record,” and Paramount buying WBD seemed like a foregone conclusion. Fast forward to today, and Netflix has won a furious M&A bake-off after three rounds of bids.
Representatives for Netflix and WBD weren’t immediately available for comment.
These exclusive talks clear the road for Netflix to acquire the Warner Bros. studios, HBO Max and a treasure trove of IP assets like “Harry Potter” and the DC Universe. Netflix, which once aspired to be like HBO when first embarking on original content, is on a course to become its next owner. Obtaining such assets could dramatically reshape the entertainment landscape and give Netflix even more power over Hollywood — concerns the streamer will have to assuage.
Regulatory hurdles
The willingness to include the unusually large breakup fee was likely critical with questions arising on how Netflix will get a deal with Warner Bros. through regulatory approval. It would face stiff antitrust scrutiny and opposition from the U.S. Department of Justice, New York Post’s Charles Gasparino reported on Tuesday.
A representative for the Department Justice declined to comment on the report.
In a Nov. 13 letter to U.S. Attorney General Pam Bondi, Federal Trade Commission Chairman Andrew Ferguson and Department of Justice antitrust division assistant attorney general Gail Slater, Republican Rep. Darrell Issa warned that a Netflix bid would raise antitrust concerns that could harm consumers and Hollywood alike. He noted that consolidation between the two companies would “diminish incentives to produce new content and major theatrical releases,” which could “undermine opportunities for the full range of industry professionals both in front of and behind the camera.”
California Attorney General Robert Bonta has previously voiced his opposition to any deals involving WBD. “Further consolidation in markets that are central to American economic life — whether in the financial, airline, grocery or broadcasting and entertainment markets — does not serve the American economy, consumers or competition well,” his office told TheWrap last month in response to Paramount’s initial offer.
“We are committed to protecting consumers and California’s economy from consolidation we find unlawful,” the spokesperson added.
The process of completing the deal could distract the company from executing its core business. There’s also the X factor of Netflix jumping into the deep end of the theatrical business, a part of the entertainment world it has kept its distance from. Netflix shares fell 5% on Wednesday when investors realized the prospect of a deal happening was very real.
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