Tag: HBO Max

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Netflix to buy Warner Bros film and streaming businesses for $72bn

Netflix has agreed to buy the film and streaming businesses of Warner Bros Discovery for $72bn (£54bn) in a major Hollywood deal.

The streaming giant emerged as the successful bidder for Warner Bros ahead of rivals Comcast and Paramount Skydance after a drawn-out battle.

Warner Bros owns franchises including Harry Potter and Game of Thrones, and the streaming service HBO Max.

The takeover is set to create a new giant in the entertainment industry, but the deal will still have to be approved by competition authorities.

Netflix co-chief executive Ted Sarandos said the streamer was “highly confident” it would receive the regulatory approval it needs and it was running “full speed” towards this.

He said that by combining the library of Warner Bros shows and movies with the streaming platform’s series such as Stranger Things, “we can give audiences more of what they love and help define the next century of storytelling”.

“Warner Bros have defined the last century of entertainment, and together we can define the next one,” he said.

Asked whether HBO should remain a separate streaming service, co-chief executive Greg Peters said Netflix believed the HBO brand was important for consumers, but added: “We think it’s quite early to get into the specifics of how we’re going to tailor this offering for consumers.”

Netflix estimates it will find $2bn to $3bn in savings, mostly through eliminating overlaps in the support and technology areas of the businesses.

Films made by Warner Bros will continue to be launched in cinemas, it said, and Warner Bros television studio will continue to be able to produce for third parties. Netflix will keep producing content exclusively for its own platform.

Labelling it a “big day” for the companies, Mr Sarandos acknowledged the acquisition may have surprised some shareholders but it was a “rare opportunity” to set Netflix up for success “for decades to come”.

David Zaslav, president and chief executive of Warner Bros, added the agreement would combine “two of the greatest storytelling companies in the world”.

“By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come,” he said.

The cash and stock deal is worth $27.75 per Warner Bros share, with a total enterprise value – which includes the company’s debts and the value of its shares – of about $82.7bn. The equity value, or cash price, is $72bn.

The boards of directors from each company unanimously approved the deal. (BBC)

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Warner Bros. Discovery to split into two companies

Warner Bros. Discovery, grappling with declines in its overall business, said Monday it planned to divide the company into two publicly-traded entities, one devoted to streaming and content production and one devoted to traditional television.

Warner Bros. Discovery CEO David Zaslav will remain as the leader of the streaming-focused entity, while Gunnar Wiedenfels, the company’s CFO who has become known for finding new ways to cut old costs, will lead the TV company. The separation is expected to be completed by mid-2026, subject to closing and other conditions, and the bulk of the current company’s debt — nearly $38 billion –will be assigned to the TV entity.

“By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said in a statement.

The company is emulating a strategy recently put into place by rival Comcast. That conglomerate is breaking up NBCUniversal, with plans to place the bulk of its cable networks in a new publicly-traded spinoff called Versant while keeping its broadcast and streaming assets under the better-known entity, NBC.

Warner has had to contend with many obstacles since being formed by the combination of AT&T’s WarnerMedia — the company once known as Time Warner — and the former Discovery Communications, Under Zaslav, Warner has fiddled with streaming strategies and deprived top cable networks of TNT and TBS of the original content they need to flourish. Warner recently lost long-held rights to televise NBA games, a contract that gave its networks a major sporting franchise that drew large crowds on the regular. And it has written down the value of its cable properties.

Warner has recently appeared to find some rhythm. The Max service has developed solid audiences for programs including “The Pitt” and “White Lotus,” and the company has recently articulated a strategy of targeting audiences interested in premium content, rather than a broader crowd. And Warner has struck new distribution deals with cable and satellite companies that call for what are seen internally as favorable terms, despite the loss of the NBA.

The streaming company will encompass the Warner TV and movie studios, HBO and HBO Max and a games and experiences division. The company will focus on building out the HBO Max streaming service and investing in programming. Meanwhile, the TV company will include Warner’s TV networks around the world along with specific digital brands tied to the TV entities, including Discovery+, Bleacher Report and CNN’s new streaming products.

Warner’s move is likely to spur new speculation about potential consolidation in the media sector. Part of the strategy behind Comcast’s Versant is its ability to do deals. Paramount Global, owner of CBS, is also under financial pressure and may have to consider new rounds of cost cutting if it cannot consummate a deal it has in place to be acquired by Skydance Media.

During an investor call Monday, executives suggested the two companies might continue to be aligned. Ad sales may represent both sides of the split, executives said, and sports, while being placed with the TV company, will likely continue to stream on HBO Max for the foreseeable future, though those plans could change as the two companies plot their own strategies in the future. “The U.S. sports rights will reside at the global networks, and its management team will determine how best to monetize the streaming and digital rights over time,” Wiedenfels said. (Variety)