Netflix’s Friday deal to acquire Warner Bros. might create more drama than either company has produced in a while. The Hollywood brand has been around for basically as long as movies, and the streaming service is on millions of TVs daily. The Trump administration has expressed skepticism of the tie-up, as have Democrats such as Sen. Elizabeth Warren (Massachusetts).
Warner Bros. passed on a bid from Paramount Skydance, which wouldn’t be so remarkable if it weren’t for the fact that the company is very friendly with President Donald Trump. The need for government approval of the merger gives the president leverage to demand things from Netflix or guide the company into his friends’ hands.
It feels like Warren has never seen a corporate merger she liked. Even though a long train of industry deals over the decades have never led to the entertainment monopoly she fears, she claims this one will lead to “higher subscription prices and fewer choices” while “putting American workers at risk.”
Maybe, just maybe, this time will be different. Perhaps Netflix will be the company that cracks the code. But Warner Bros. is the cursed monkey’s paw of the entertainment industry, tricking several corporate titans into believing they could take over the world by acquiring or merging with it.
Time bought its parent company to create the world’s largest entertainment company in 1989. Paramount tried and failed to stop that acquisition with a hostile takeover of Time. AOL thought it had conquered everything when it bought TimeWarner in 2001. The dot-com bubble said otherwise. (Note for younger readers: Time and AOL used to be very important companies.)
Fifteen years ago, the then-CEO of Time-Warner infamously sneered at the idea he should fear Netflix: “Is the Albanian Army going to take over the world?” Then, in 2018, AT&T joined the party and bought TimeWarner. For several suspicious reasons, the first Trump administration sued to stop that from happening. But the antitrust challenge failed. The new company failed, too, and AT&T sold the former TimeWarner in 2022. Discovery picked up the brand to form its cable-TV empire, just as cord-cutting was reaching terminal velocity.
Netflix is purchasing only the studio side of the company, along with HBO and its streaming service. The deal would give them control of many classic movies and TV shows, or “beloved intellectual property,” as the corporate statement put it. The cable network side of the business, which includes CNN, TNT, Discovery, and others, will be spun off.
Much of the coverage treats the acquisition as a departure from Netflix’s previous business strategy, which was mostly homegrown. This is overstated. Its most-watched shows have long included other people’s reruns, such as The Office, Friends, Grey’s Anatomy and Suits. Stranger Things dominates now, but many Netflix originals flop.
Netflix’s specialty has always been delivery, not content creation. First with DVDs in the mail and then with streaming, the company changed the way people watch movies, not the movies themselves. This deal could accelerate the decline in movie theaters, though Netflix says theatrical releases will continue.
It’s hard to say what the new company would have a monopoly on. Netflix is a leading streaming service, but it only has a 25 percent market share and faces intense competition from several companies, including Amazon, which was founded by Post owner Jeff Bezos. If the market is defined as TV in general, Netflix’s current share is under 10 percent.
As Warner Bros. history proves, it’s nearly impossible to predict business trends in the entertainment industry. As long as both companies’ shareholders approve, the government would need to prove there will be harm to consumers if it wants to block the deal. Political favoritism and fear of bigness aren’t good enough reasons.
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