Love triangles make compelling viewing entertainment, but the hottest trio right now isn’t airing on a popular network or one of the leading streaming services. The must-watch love triangle of the season happens to be the one involving three of the media companies themselves.
Netflix (NASDAQ: NFLX) has had a deal in place to acquire most of Warner Bros. Discovery‘s (NASDAQ: WBD) assets since November. Both parties signed off on a $72 billion deal that is worth closer to $83 billion on an enterprise value basis for the streaming and studio assets. Warner Bros. Discovery would spin off its linear networks and less lucrative media businesses before the wedding ceremony.
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It’s a cute couple, but at least one suitor hasn’t left the front porch. Scorned losing bidder Paramount Skydance (NASDAQ: PSKY) isn’t willing to take no for an answer. It wants all of Warner Bros. Discovery, and it’s not giving up on its passioned pursuit.
In Hollywood — think Casablanca, Bridget Jones’s Diary, The Philadelphia Story, etc. — the choice is up to the subject of the rivaled affections. It’s the characters played by Ingrid Bergman, Renee Zellweger, and Grace Kelly who have the final say in their respective love-triangle classics. Things are slightly different in corporate America. Warner Bros. Discovery gets to pick its soulmate, but the parents have the final say on the proposed pairing.
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Most buyouts — even those entangled in ferocious bidding battles — eventually happen. Things get hairier when it’s giants hitting on giants. Netflix and Warner Bros. Discovery are gargantuan media stocks. From the perspective of streaming service stocks, Netflix and Warner Bros. Discovery’s HBO Max are leaders in the premium space. There’s a little more wiggle room when you broaden the scope to cover entertainment or content creation.
The U.S. Department of Justice and perhaps even the Federal Trade Commission will be mulling the combination of Netflix with Warner Bros. Discovery very closely. Would the two businesses coming together make streaming services more expensive for consumers? Will the new entity become too powerful? Netflix already has a massive audience of 325 million subscribers worldwide. Will it become too large if it also includes HBO Max, DC Comics, and the Harry Potter franchise?
