How Netflix outsmarted Warner Bros Discovery to claim Hollywood’s top honor

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Economic Times, click this post to read the original article.

Netflix recently announced a significant acquisition, purchasing Warner Bros Discovery’s TV, film studios, and streaming division for $72 billion. Initially, this deal began as a fact-finding mission, but as Netflix executives explored Warner Bros’ potential, they recognized the strategic advantages of acquiring the century-old studio. This acquisition not only expands Netflix’s library with valuable content but also complements its existing streaming services, potentially accelerating growth for HBO Max through insights gained from Netflix’s experience.

The auction for Warner Bros Discovery commenced after the company rejected multiple unsolicited offers from Paramount Skydance. Netflix’s interest intensified when Warner Bros announced plans to separate its assets into two publicly traded companies, prompting Netflix to consider acquiring the studio and its streaming capabilities. As the bidding process evolved, Netflix faced competition from Paramount and Comcast, leading to daily discussions among its advisory team to prepare a competitive bid.

In the final stages of the auction, Netflix’s offer was deemed the only binding and complete one by Warner Bros’ board, which preferred the immediate benefits of Netflix’s proposal over a longer-term merger plan from Comcast. Despite Paramount increasing its offer, concerns over financing led the Warner Bros board to favor Netflix’s bid. To further assure the sellers of regulatory approval, Netflix included a substantial breakup fee, reflecting their confidence in securing the deal. The acceptance of Netflix’s offer was met with enthusiasm among executives, who had initially perceived their chances of success as uncertain.