Netflix Responds to Concerns About Warner Bros Deal

Netflix is trying to calm voices after announcing plans to buy a big chunk of Warner Bros. Discovery for around $83 billion. The streaming company’s top executives, Greg Peters and Ted Sarandos, recently sent a message to their employees addressing some of the concerns that have been raised about this huge deal. They want everyone to know that this purchase won’t lead to studio closures or major disruptions in how things work.

The announcement of this deal has created quite a stir in Hollywood and beyond. Many people are worried about what happens when the biggest streaming service in the world gets even bigger by taking over one of the most famous movie and television studios. Netflix currently has over 300 million subscribers worldwide, and adding Warner Bros. properties like HBO, DC Studios, and a massive library of movies and shows would make them even more powerful.

In their message to staff, the Netflix executives were clear that this process won’t happen overnight. They explained that completing this deal will take about a year or more, and there will be many steps along the way. One of the main points they wanted to emphasize was that Netflix and Warner Bros. don’t really overlap in what they do. While Warner Bros. makes movies and shows, Netflix is mainly a platform that streams content. According to the executives, this means there’s no need to shut down any studios or let people go because both companies do different things that complement each other.

However, not everyone is convinced by Netflix’s reassurances. Several groups have voiced strong concerns about what this deal means for the entertainment industry and for regular people who watch movies and shows. Movie theatre owners are particularly worried. Cinema United, a group representing theatres around the world, called the deal an unprecedented threat to cinemas everywhere. Their concern is that Netflix has never been a big supporter of showing movies in theatres before streaming them, and if they control Warner Bros., they might reduce how many films get released in cinemas or shorten the time between theatre releases and streaming availability.

Netflix CEO Ted Sarandos has addressed this concern by saying that long theatrical windows aren’t that friendly to consumers. He believes people want to watch content when and where they choose, not wait months after a movie leaves theatres. But theatre owners see it differently. They argue that the traditional movie theatre experience is important and that if Netflix takes control of Warner Bros., it could speed up the decline of cinemas that are already struggling.

Politicians have also weighed in on the deal. Senator Elizabeth Warren called it an antitrust nightmare, warning that combining Netflix with HBO Max would create one massive media company controlling close to half of the streaming market. She’s concerned that this kind of concentration would lead to higher prices for consumers and fewer choices about what to watch and where to watch it. The White House has also expressed scepticism, with administration officials suggesting that regulators will take a very close look at whether this deal should be allowed to go through.

The concerns aren’t just about streaming services. People in Hollywood, including actors and writers, are worried about what this means for jobs and creative work.  Adding to the drama, Paramount has thrown its hat in the ring with a competing offer. They’ve launched what’s called a hostile takeover bid, offering to buy Warner Bros. Discovery for even more money than Netflix. Paramount’s offer is valued at around $108 billion, and they’re going directly to Warner Bros. shareholders to try to convince them to accept their deal instead. Unlike Netflix, which only wants the streaming and studio parts of Warner Bros., Paramount wants to buy everything, including cable networks like CNN.

This competing bid has made the situation even more complicated. Netflix now has to convince regulators that their deal is better for everyone involved, including consumers, workers, and the broader entertainment industry. They argue that their experience with understanding what viewers want to watch, combined with Warner Bros.’ huge library of content and ability to create new shows and movies, would actually benefit consumers by giving them better recommendations and more quality content.

President Trump has also commented on the situation, saying that any deal to buy Warner Bros. should probably include CNN, the news network. He’s raised concerns about market share and suggested that regulators should look carefully at whether Netflix would control too much of the streaming market. This political involvement adds another layer of uncertainty to whether the deal will be approved.

Netflix is making the case that their purchase would create efficiencies and improve the viewing experience for people. They point to their sophisticated recommendation system that helps people find shows and movies they’ll enjoy. By combining that technology with Warner Bros.’ content creation capabilities, they argue they could make even better entertainment that more people want to watch. They also suggest that consumers might benefit from paying for one subscription instead of multiple ones if Netflix and HBO Max eventually merge.

But critics aren’t buying these arguments. They point out that less competition usually means higher prices and fewer choices for consumers, not more. When there are fewer big players in an industry, the remaining companies have more power to set prices and decide what content gets made. Some analysts have said that combining Netflix and Warner Bros. could be a death blow to important parts of the movie business and long-held traditions in Hollywood.

The road ahead for this deal is long and uncertain. Even if Warner Bros. shareholders agree to sell to Netflix instead of Paramount, the purchase would still need approval from government regulators in the United States and other countries around the world. This review process typically takes many months, and regulators will be looking closely at whether the deal would harm competition and hurt consumers. For comparison, when Disney bought parts of 21st Century Fox, that process took 15 months to complete.

Netflix seems confident they can address the concerns and get approval for the deal. They’re positioning themselves as innovators who can take Warner Bros.’ valuable properties and turn them into even more successful shows and movies that wouldn’t have been possible otherwise. Whether regulators and the public accept this argument remains to be seen. For now, Netflix is doing its best to reassure everyone that this deal is good news for the entertainment industry and for people who just want to watch great content, even as many voices continue to express serious doubts.