By choosing Netflix rather than Paramount Skydance, Warner Bros. Discovery has just triggered the start of a political storm. The failure of the offer made by David Ellison, whose father is one of Donald Trump’s most influential allies, immediately shifted the issue from competitive terrain to that of political influence. By evoking a “market share problem” and ensuring that he would personally follow the examination of the file, Donald Trump transformed the $80 billion deal into an affair of state.
Netflix had, however, planned everything, or almost: in a precise operation, the group took over the Warner studios, HBO and the Max platform, but left the cable channels (CNN, Discovery, Turner) which had to be exfiltrated into a separate entity to minimize the risk of concentration. For their part, Warner studios had to maintain their autonomy and maintain cinema releases, a gesture addressed to American and European regulators. Finally, the buyer had at the same time secured historic bridge financing with $59 billion provided by Wells Fargo, BNP Paribas and HSBC, intended to be refinanced immediately.
That being said, the rivalry between Netflix and Paramount weighed heavily in this turnaround, especially since David Ellison’s offer was considered a favorite at the start of the process.
Basically, the central question is the definition of the market, and Netflix defends a broad vision where YouTube, TikTok and social platforms capture an essential part of video attention time. This reading therefore dilutes the notion of domination, while conversely, a scope restricted to premium streaming would place Netflix well above the 30% threshold which traditionally alerts the Department of Justice. A Doj who finds himself at the heart of the game and whose independence will be challenged.
Whatever the outcome of the case, the operation reveals an unprecedented change of scale in the entertainment industry. By wanting to buy Warner, Netflix is not just acquiring a century-old studio or a catalog of iconic IPs but could constitute the first global conglomerate capable of unifying the entire value chain, from intellectual property, to production, global distribution and the streaming platform. No player, whether Disney, Amazon, or even Apple, has until now achieved such complete integration.
If successful, the merger would bring Hollywood but also cultural players and the entertainment industry into a new era. A fully integrated configuration that has long been theoretical, and today within reach of Netflix. A perspective which also explains why the debate is no longer limited to competition law.
