from the do-not-pass-go,-do-not-collect-$200 dept
So Netflix has announced that it’s buying Warner Brothers Discovery (including HBO) for a whopping $82.7 billion. As we’ve well covered, it’s the latest in a long series of pointless Warner mergers stretching back to the 2001 AOL acquisition, which all resulted in oodles of chaos, price hikes, layoffs, and generally a steady erosion in product quality.
Netflix’s deal includes a $5.8 billion breakup fee and promises to maintain Warner Bros. current operations, “including theatrical releases.” The deal doesn’t include Warner Bros Discovery’s struggling linear networks business (CNN, TNT, HGTV and Discovery+) which Netflix wisely wanted nothing to do with. Those are scheduled to be spun out next year into their own sagging sub-company.
Netflix is, of course, making all manner of pre-merger promises about how the deal will be great for everyone, especially creatives:
“Netflix also made its pitch to filmmakers and creatives, writing that “by uniting Netflix’s member experience and global reach with Warner Bros.’ renowned franchises and extensive library, the Company will create greater value for talent — offering more opportunities to work with beloved intellectual property, tell new stories and connect with a wider audience than ever before.”
But as we’ve seen the last three or four times Warner Brothers has been acquired, pre-merger promises mean absolutely nothing. The massive debt created by these acquisitions inevitably results in panicked cost cutting, which usually involves mass layoffs, (even bigger) price hikes, and a general cannibalization of brand and product quality. It happens over and over again.
Of the suitors that could have bought Warner Brothers Discovery (Comcast/NBC and Larry Ellison/CBS/Paramount), Netflix is probably the “best” option. They are (for now) the least up Trump’s ass of the three bidders; and generally may retain more of the core Warner Brothers Discovery infrastructure and staff due to fewer existing redundancies.
That’s not to say the deal will be good, necessarily. If we lived in a non-corrupt country with functioning regulators, the government likely wouldn’t allow any additional consolidation in mainstream corporate media, as the results to date have been nothing but harmful for labor, consumers, and markets. These companies’ journalism arms, if you haven’t noticed, like to downplay or ignore this fact in coverage.
Play a little game with me at home: if you’re reading a story about this deal, stop and notice if the journalist and outlet, at any point, mentions the fact that the decades’ worth of past variants of Warner deals were utterly disastrous for labor, consumers, creativity, and healthy markets. Because that’s kind of important context if your job is informing the public of the truth!
The bungled AT&T acquisition of Warner and DirecTV alone resulted in a massive layoff spree including 50,000 people. But when the consolidated corporate press covers the latest merger, that’s not mentioned. Why is that choice made editorially, do you wager?
Meanwhile Netflix still has a hurdle to face: the weird zealots at the Trump DOJ and FCC. Paramount and/or the Trump administration has spent the last week seeding complaints in Republican-friendly media that the bidding process was unfair to Larry Ellison and CBS/Paramount, and that the Trump administration is concerned about the antitrust impact of a Netflix Warner Brothers combination.
The Trump administration couldn’t give any less of a shit about antitrust or consolidated corporate power; they just want leverage over Netflix and/or to make sure their friend Larry Ellison can acquire HBO and CNN. And they’re mad at Netflix because they put some gay people in shows about the military. The Ellisons may acquire the spun off TV assets, but they may also still want to leverage Trump to get much more.
So I would not be surprised that if in a few weeks or so you see Trump’s FCC lackey Brendan Carr launch some kind of fake inquiry into “irregularities in the bidding process,” where he talks a lot about Netflix’s consolidated power “not being in the public interest.” The goal will be twofold: to force ownership over to Ellison, or at least to (as we’ve seen with CBS mergers) force Netflix to kiss Donald’s ass.
The press (and the usual assortment of useful idiot pundits) will likely then help Trump pretend these inquiries are legitimate “populist” antitrust actions.
If you recall, the first Trump administration sued to stop the AT&T Time Warner deal. That was heralded as a rare example of the administration actually caring about consolidated corporate power by the press; but it turned out it was mostly because Rupert Murdoch had his own acquisition offer for CNN rejected and wanted to scuttle the deal.
Keep your eyes peeled for regulatory shenanigans. Even if the Trump administration doesn’t abuse FCC and DOJ power to help Ellison, they’ll certainly abuse regulatory merger approval power to try and force Netflix to kiss their asses in new and problematic ways (see: CBS, Verizon). And Netflix, no stranger to throwing ethics under the bridge when convenient, will very likely be happy to oblige.
Filed Under: competition, consolidation, doj, larry ellison, media, mergers, video
Companies: netflix, warner bros. discovery
