What Does Netflix Buying Warner Bros. Discovery Mean for the Industry?

David has not just beaten Goliath. He's grown up, scaled up, and bought him lock, stock, and barrel. The news that Netflix plans to acquire Warner Bros. Discovery (WBD) for a massive $82.7 billion dropped like a cannonball into a very small pond yesterday.

The financial markets seemed cautious about it. WBD shares were up, Netflix's were flat, and those of the failed suitors (Paramount and Comcast) were respectively down by nearly 10% and marginally improved. Industry reaction tended to the much more unequivocal, with a succession of organisations decrying the move. 

A statement from the Writers Guild of America's West and East branches neatly encapsulates the reaction. In a statement it says that the deal will: "eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers."

The Directors Guild of America rattled less sabres but talked of "significant concerns." So, given that we've already seen a massive merger on this scale when Amazon bought MGM Studios, why the hostility?

The Theatrical Problem

One of the big concerns lies with what it will do to the cinema pipeline. The movie theater side of the entertainment business is yet to recover from Covid, let alone the existential threat that streaming has posed to its continuing existence. When Amazon bought MGM it bought a studio in decline and was largely after acquiring the IP (intellectual property) of the lucrative James Bond franchise.

WBD is still a Hollywood powerhouse which targets between 12-14 titles a year across its main labels. Mickey 17, A Minecraft Movie, Sinners, Superman, and more have all hit the theaters in 2025. The questions is would they do that in 2027? The new combined company could certainly move some content wholly online to please its subscriber base, for the rest it could tighten the release windows considerably.

On average, movies nowadays have an exclusive theater window of 31-45 days, with tentpole titles and those that perform surprisingly well at the box office edging closer to 90 days.

Netflix can not only shrink this, it looks like it's planning to. "Over time, the windows will evolve to be much more consumer-friendly, to be able to meet the audience where they are quicker," said Netflix co-CEO Ted Sarandos in a call with press and investors on Friday. "Our primary goal is to bring first-run movies to our members because that's what they're looking for."

Cinema United President Michael O'Leary called the merger "an unprecedented threat."

The Jobs Market

"This acquisition will allow us to significantly expand our production capacity in the United States and keep investing in original content over the long term," said Netflix co-CEO Greg Peters on the same call as Sarandos. "That means more opportunities for creative talent means more jobs created across the entire entertainment industry. Warner Bros. IP also means that we'll be able to build on worlds and characters that audiences absolutely love, which means more opportunities for creators to tell those great stories."

There is not much faith in these words, primarily because those working at the coalface have seen time and time again that industry consolidation means less work rather than more. 

The WGA statement already mentioned earlier sets out the prime concerns, and these sentiments have been echoed across the industry. "Teamsters have been clear on our position that greed-fueled consolidation of corporate power, no matter what industry, is a direct threat to good union jobs, the livelihood of our members and the very existence of our industry," the Hollywood Teamsters union said in a statement.

Netflix says the deal will result in savings of $2-3 billion a year. The concern is that much of that figure could come from lay-offs.

What Happens Next?

The Teamsters have called for "opposition across all levels of government", the WGA says that 'This merger must be blocked," and opposition to the deal is snowballing rapidly.

It will certainly be subject to antitrust scrutiny on both sides of the Atlantic. The resulting media company would be an absolute giant. Netflix has around 300 million global subscribers, WBD has 130 million primarily for HBO Max. And while there is likely to be a lot of crossover between the two figures, you can imagine 400 million is not too far off the mark.

It also concentrates a huge amount of IP into a single company. While the sports and networks component of WBD is being spun off into a separate company,  Discovery Global, it does mean that Netflix will own everything from Citizen Kane to Game of Thrones, John Oliver will have a new business daddy to be rude about, and more. There will be huge public interest in this, and regulators can certainly be swayed by sentiment.

Netflix and WBD say they expect to close the transaction in 12-18 months, pending WBD shareholder approval and regulatory clearances. However, it's not a cut and dried process. According to CNBC, an unidentified senior official in the Trump administration said the White House has “heavy skepticism” about the proposed merger, and it looks increasingly likely that Paramount will contest the deal too.