In a bold move shaking the global entertainment industry, streaming titan Netflix is aggressively advancing its monumental $72 billion deal to acquire key assets from Warner Bros Discovery (WBD). This strategic push comes amidst a complex bidding war and internal reassurances from the company's top leadership.
Leadership Addresses Employee Concerns Amid Bidding War
According to a Reuters report, Netflix's co-CEOs, Greg Peters and Ted Sarandos, have directly communicated with their workforce via a letter. This internal memo aims to solidify employee confidence in the company's commitment to Warner Bros' storied legacy, particularly its tradition of releasing films in cinemas. The letter explicitly states that theatrical distribution, previously not a Netflix priority, will become part of their business once the deal concludes.
This reassurance became crucial after Netflix's initial equity offer was challenged by a hostile enterprise bid from Paramount Skydance, valued at a staggering $108.4 billion for the entire Warner Bros Discovery company. The Netflix chiefs described Paramount's counter-move as "entirely expected," yet they remain optimistic about securing regulatory approval for their own acquisition.
The YouTube Justification and Market Share Battle
Netflix's core argument for the merger hinges on competition with digital behemoth Google's YouTube. The company contends that even after absorbing Warner Bros' assets, its market position would remain secondary. Internal data cited in the letter reveals that Netflix's US view share would only increase from 8% to 9%, still trailing YouTube's 13%.
Speaking at the UBS Global Media and Communications Conference, Greg Peters emphasised the competitive landscape. He warned that a potential merger between Paramount and WBD would create a entity with a 13.8% view share, surpassing both Netflix and YouTube, and presenting a greater anticompetitive threat.
However, this rationale faces scepticism. Paramount Skydance CEO David Ellison dismissed Netflix's comparison, likening it to "Coke can buy Pepsi, that they're both beverages because Budweiser is a substitute for Coke." Ellison argued that combining the top and third players (Netflix and WBD) grants unprecedented market power, whereas his bid unites the fourth and fifth. He further cautioned that the Netflix-WBD union could mean "the death of the theatrical movie business in Hollywood," a fate his company claims to be trying to prevent.
Antitrust Hurdles and Future Promises
Legal experts are casting doubt on Netflix's framing of YouTube as a direct competitor. Antitrust attorney Abiel Garcia pointed out the flaw in arguing competition based solely on total daily viewing hours, noting the distinct content and market segments each platform serves. This perspective suggests the US Justice Department may not view them as equivalent rivals.
Despite industry anxieties about potential layoffs fueled by AI integration, Netflix's letter sought to allay fears, asserting that no studios would be shut down post-merger. In a related commitment, Paramount has also stated it will not reduce content spending and will maintain separate studio divisions if its bid succeeds.
The high-stakes battle for Warner Bros Discovery underscores the intense consolidation race in the streaming sector. As Netflix positions the acquisition as essential for survival against a dominant YouTube, regulators will ultimately decide if this mega-deal reshapes the entertainment landscape or falls to competitive and legal challenges.
