Will Netflix’s $83B Proposed Deal for Warner Bros Discovery Hurt Consumers?

Netflix’s enormous $82.7-billion proposed takeover of Warner Bros. Discovery studios and streaming services, announced on Dec. 5, has alarmed everyone from consumer groups to entertainment veterans to prominent figures in Washington as well as Wall Street.

The transaction has caused multiple factions to worry that our bills for streaming services will spike, that we’ll have fewer entertainment vehicles to enjoy at home and that big business is, once again, generally making us look like suckers by forcing us pay more money to receive less satisfaction. I understand this principle. As I’ve gotten older, my favorite rock and roll bands and singers consistently charge higher prices for inferior concerts.

The jitters have spread to the financial community. Netflix’s stock tumbled $2.98, or 2.89 per cent on the day that the deal was announced. By mid-day on Dec. 8 as we were going to press it was down another $4.46 or 4.45 percent to $95.78, far off its 52 week high of $134.12.

And consumers and industry insiders are worried, too, that this deal lead will lead to higher prices and fewer choices.

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite. Theaters will close, communities will suffer, jobs will be lost,” said Michael O’Leary, CEO of Cinema United in a news release, succinctly summing up the fears of everyone from ordinary consumers to watchdog group to U.S. senators.

”This merger must be blocked,” the Writers Guild of America East and West said in a statement. “The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.”

The Guild raise a fascinating point. Does Washington have the will to try and stop the completion of this transaction? Our politicians may be the best hope at finding a way to prevent this mammoth deal from closing. For a change, it seems, Washington may be willing to put partisan politics in the back seat as a way to move forward.

How profound is the unease? Can you remember when two decidedly politically contrarian senators found common ground in a public forum?

Kansas Senator Roger Marshall, a Republican said in a statement:

“Netflix’s $82 billion attempt to buy Warner Bros. would be the largest media takeover in history—and it raises serious red flags for consumers, creators, movie theaters, and local businesses alike. One company should not have full vertical control of the content and the distribution pipeline that delivers it. Prices, choice, and creative freedom are at stake.”

Elizabeth Warren of Massachusetts, a liberal Democrat noted to her followers: “This deal looks like an anti-monopoly nightmare. A Netflix-Warner Bros. would create one massive media giant with control of close to half of the streaming market—threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk.”

Hollywood’s morale was shaken to its core, too. The Producers Guild of America said in a press release: “As we navigate dynamic times of economic and technological change, our industry, together with policymakers, must find a way forward that protects producers’ livelihoods and real theatrical distribution, and that fosters creativity, promotes opportunities for workers and artists, empowers consumers with choices, and upholds freedom of speech. This is the test that the Netflix deal must pass. Our legacy studios are more than content libraries – within their vaults are the character and culture of our nation.”

Bring Back the Ghost of Howard Beale!

With all of this fear, naysaying and sheer paranoia on display, it makes you wish that our society boasted its own version of Howard Beale! We remember him fondly, right? It was in a scene after a similarly titanic business deal was struck in the fictional film.

Beale, played magnificently by Peter Finch, thundered in the 1976 movie Network, “I’m as mad as hell and I’m not gonna take it anymore!”

Before we knew it, Beale’s tirade had inspired ordinary citizens to follow his lead and open their windows at home and scream the exact same message. Sure, the moment played out as great cinema but it also suggested the power that people have to make things happen. If only today we had someone who could generate that kind of furor.

Well, speaking of movie stars, two-time Oscar winner Jane Fonda of the Committee for the First Amendment has weighed in. “Today’s news that Warner Bros. Discovery has accepted a purchase bid is an alarming escalation of the consolidation that threatens the entire entertainment industry, the democratic public it serves, and the First Amendment itself,” Fonda said in a news release.

And when have Fonda and President Donald Trump ever been on the same page. Trump said on Dec. 7 that combining Netflix with Warner Bros. Discovery, which is the parent of HBO Max, CNN, TNT and HGTV “could be a problem.”

Consumers’ Unease

It is almost a cliché that businesses involved in mega-mergers try to convince us that consumers will come out ahead. But inevitably, workers get the old heave-ho and the so-called synergies almost never result in lower prices or more choices for consumers.

And as we were going to press, Paramount Skydance said on Dec. 8 that it was mounting a hostile all cash offer valued at $108.4 billion, going directly to shareholders Warner Bros Discovery shareholders in a bid to derail the deal Neflix negotiated. The takeover is a long way from being over and alarm bells will only be ringing louder as the battle rages.