Concerns Over Netflix’s Warner Bros. Discovery Acquisition
Disney CEO Bob Iger has voiced concerns regarding Netflix’s planned acquisition of Warner Bros. Discovery’s streaming and studio assets, highlighting potential issues related to “pricing power over consumers.”
During an appearance on CNBC’s “Squawk Box” this Thursday, Iger stated that while Disney hasn’t formally taken a stance on the proposed merger, he still felt it necessary to raise these issues.
“If I were a regulator assessing this merger, I’d consider a few factors. First, I would examine the consumer impact,” Iger remarked.
“Is there a risk that one company could exploit pricing in a way that harms consumers?” he added.
Iger also questioned how this acquisition could affect the broader landscape of streaming subscriptions worldwide, suggesting that Netflix’s pricing might not be in the best interest of viewers.
Last week, Netflix and Warner Bros. Discovery revealed their plans for an acquisition that includes Warner Bros. Studios and HBO, with the total deal valued at around $72 billion.
In the proposed merger framework, Warner Bros. Discovery’s linear TV network would be spun off into a separate publicly traded entity, allowing Netflix to retain key assets.
Just three days following this announcement, Paramount Skydance made a hostile bid for all of Warner Bros. Discovery at $30 per share. The company is reportedly valued at over $108 billion, suggesting a potentially protracted bidding contest. Paramount is even contemplating raising its offer by up to 10%.
The deal between Netflix and WBD is under scrutiny for antitrust concerns, as critics argue that merging Netflix with HBO Max could significantly enhance the company’s dominance in global streaming.
Iger also expressed worries about the effects on Hollywood’s creative ecosystem, especially in terms of theatrical releases.
“I’m keen to understand the potential impact not just on the creative community but also on TV and film, particularly the theatrical ecosystem,” he noted.
He emphasized that theaters showing films around the globe usually operate on narrow margins, necessitating both high volume and meaningful interaction with films to sustain profitability.
“This is a vital global business,” Iger stressed.
Reflecting on his own experience, Iger mentioned Disney’s $72 billion acquisition of parts of 21st Century Fox back in 2017, which provided strategic advantages just before the pandemic hit.
“We’ve grossed $33 billion from our movies over the last two decades… so we’re conscious of safeguarding that business,” he remarked. “This is crucial to what I refer to as the global media ecosystem.”
However, Iger was not definitive about whether Disney intends to formally engage with regulators regarding the Warner Bros. situation. In response to a question, he said, “We haven’t determined if we’ll take a position… We’re merely suggesting what regulators should consider.”
When queried about whether Netflix’s acquisition poses a greater competitive risk to Disney, Iger opted not to elaborate.
“No, I’d rather not comment further,” he replied.
Netflix’s proposal has received the go-ahead from the WBD board but still requires regulatory approval and successful separation from the cable network.
Paramount’s takeover offer, designed to provide a higher cash value to shareholders and prevent a breakup, has been turned down by WBD executives.
“It’s nice to just observe rather than be actively involved,” Iger mentioned after Disney announced a significant investment and licensing deal with OpenAI.
