Five takeaways from the blockbuster Netflix Warner Brothers deal

Natalie Sherman,Enterprise reporter,Danielle Kaye,Enterprise reporterandChristal Hayes,Los Angeles senior reporterWarner Brothers DiscoveryNetflix is shopping for Warner Brothers’ streaming providers, together with HBO, identified for exhibits like Recreation of Thrones It feels like a easy merger deal, however it’s obtained all of the elements of a Hollywood drama: a wealthy and highly effective suitor, political intrigue, and loads of cliff-hangers.Netflix’s deal to purchase Warner Brothers Discovery’s storied film studio and common HBO streaming networks, is a real-life story of a conquering large.However with regulators and rivals nonetheless ready within the wings, it is in all probability simply the beginning of the saga.Because the story unfolds, listed below are 5 key issues to look out for.1. Netflix is turning into much more powerfulNetflix has been pulling forward in Hollywood for years now, rating because the world’s largest streaming subscription service and largest producer of recent content material in California. However this deal – the most important within the trade for years – would verify its place on the head of the pack, handing the corporate a listing with almost a century’s price of titles and beefing up its already formidable manufacturing capability. That is to not point out its sheer subscriber would possibly, as Netflix prepares so as to add a few of HBO’s 128 million subscribers to its already greater than 300 million-strong base.”Netflix is already the most important streaming service and now you add HBO Max to that and it turns into arguably untouchable,” mentioned Mike Proulx, vp at analysis agency Forrester.Murray Shut/Getty ImagesWarner Bros owns the rights to the Harry Potter filmsThe deal will unite beloved historic franchises like Looney Tunes, Harry Potter and Mates and HBO hits like Succession, Intercourse and the Metropolis and Recreation of Thrones beneath the identical roof as Netflix’s much less typical output, together with Stranger Issues and KPop Demon Hunters.The acquisition additionally consists of TNT Sports activities outdoors the US.2. It may imply costs go up…. or downNetflix mentioned it hopes to finish the deal within the subsequent yr to 18 months. However executives are coy about how – or whether or not – they plan to include Warner Brothers and its flagship HBO model into the present Netflix service.Netflix’s co-chief government Greg Peters mentioned the HBO title was “very highly effective” and would give the agency “quite a lot of choices”, however wouldn’t elaborate additional.Netflix may package deal up movies and programmes into totally different bundles, though analysts say they might be stunned to see the HBO model disappear altogether.The influence on costs can also be unclear. Netflix’s dominance may permit it to cost prospects extra. But when viewers discover they’re paying for one streaming service quite than two, it may price them much less.3. Streaming is the longer term and Hollywood feels forged asideWarner Bros is among the studios that outlined Hollywood, creating classics reminiscent of Casablanca, Gone with the Wind and the The Exorcist.However this takeover is an illustration of how cinema’s golden age has light.The trajectory is obvious, Forrester’s Mr Proulx mentioned, the longer term is “all-streaming”.”With this deal it’s official: legacy media is ending.”Netflix has promised to maintain releasing movies in cinemas, a choice that makes some sense as it will likely be buying the DC superhero franchise, movies that do very effectively in film theatres.However not everybody believes that can stay a precedence for the streamer.In spite of everything, earlier this yr Netflix’s co-chief government officer Ted Sarandos mentioned he believed movie-going was an “outdated idea”. And the consolidation touches a nerve in an trade already wrestling with earlier job cuts, decline in productions and the specter of synthetic intelligence.Titanic director James Cameron was one among many in Hollywood to greet the take care of dismay, warning simply earlier than it was introduced, that he thought it might show a “catastrophe” for the trade.4. The deal is just not but doneCompletion of the deal is much from sure. First, Warner Brothers Discovery has to finish the spin-off of the elements of its enterprise that it isn’t promoting to Netflix, together with CNN, Discovery and Eurosport. In the meantime rival suitor Paramount Skydance, which had hoped to purchase your entire Warner Brothers Discovery enterprise, could but attempt to persuade shareholders it may provide a greater various. Warner Brothers DiscoverySuccession, starring Jeremy Sturdy and Sarah Snook, drew giant audiences for HBOThe largest query nonetheless, is whether or not the deal will get approval from competitors regulators within the US and Europe – one thing that would pose a serious problem.In Washington lawmakers from each events have already chimed in towards the deal, citing worries it should result in fewer selections for customers and better costs. Mr Sarandos mentioned Netflix, which has to pay Warner Brothers $5.8bn if the deal falls aside, was “extremely assured” it might win approval. It would hinge partially on how regulators outline the aggressive panorama, mentioned Jonathan Barnett, a professor on the College of Southern California Gould College of Legislation. If regulators solely have a look at video streaming, Netflix’s elevated share of the market may elevate important crimson flags. But when regulators undertake a broader definition, one that features cable and broadcast TV and even YouTube as Netflix’s opponents “the focus issues develop into much less and fewer”, he mentioned. Rebecca Haw Allensworth, a professor at Vanderbilt Legislation College, mentioned normally a merger like this might be a “clear-cut case for a problem”, sometimes pushing for higher phrases for customers.This time, she is frightened the Trump administration would possibly put stress on Netflix over questions like range and political bias, as has occurred in different circumstances.5. Donald Trump is one other wild cardLooming over the controversy is whether or not President Donald Trump will weigh in. This administration has promised a lighter regulatory contact with regards to mergers.However the president has spoken extremely of Paramount Skydance’s homeowners, the tech billionaire and Republican donor Larry Ellison and his son David who’re behind the rival bid for Warner Bros. And Trump has at all times proven a eager curiosity within the media and leisure trade.There was no remark from competitors regulators within the US, however a senior Trump administration official advised CNBC that it views Netflix’s bid for Warner Bros with “heavy scepticism”.