What to expect from the acquisition of Warner Bros. An unprecedented event that could change the entire film industry

Netflix recently announced that it has reached an agreement to acquire – for about 83 billion dollars – Warner Bros., the film division of the large conglomerate Warner Bros. Discovery, one of the most influential entities in the entertainment industry. If the deal goes through, the platform – already one of the leading players in the U.S. audiovisual market – would enjoy an unprecedented position in the sector, obtaining the rights to exploit numerous highly popular franchises and narrative universes, such as The Lord of the Rings, Harry Potter, Game of Thrones and Barbie, among many others.

The possible acquisition also includes the DC Studios, the division responsible for films inspired by DC Comics characters, including Superman or Batman, as well as the streaming platform HBO Max. Rumors had been circulating for weeks about who would take over the company, which had long been facing financial difficulties. In recent years, Warner Bros. had accumulated substantial debt – which it could no longer sustain, and for this reason it had been looking for a buyer. Despite the financial situation of the parent company, the division that would be acquired by Netflix is still solid and competitive, and possesses a wealth of skills and expertise that could prove particularly advantageous for the company in the coming years.

How the film industry might change

The agreement between Netflix and Warner Bros. represents a groundbreaking event for the film industry and could radically redefine the balance of the sector: two entities of this scale, in fact, had never merged before. Although Netflix’s real intentions are not yet clear, observers outline several possible scenarios.

The first is that Netflix leverages the acquisition to modify its corporate structure and also become a traditional film distributor. In this case, mid-range or smaller films could find increasingly less space in theaters, risking not being produced anymore or being released directly on streaming.

A second scenario would instead see Netflix using Warner to transform the movie theater model into a sort of promotional showcase for the platform. Major films based on franchises and intellectual properties managed by Warner would arrive in theaters only for short periods, then quickly move to streaming, with the goal of boosting long-term subscriptions and attention toward Netflix.

The third scenario would be the one most feared by industry professionals, consisting in the progressive dismantling of Warner’s operational structure, while Netflix would exploit only the intellectual property of the brand. This would entail the end of Warner’s traditional film distribution and, consequently, a drastic reduction in the number of major annual theatrical releases in theaters, in favor of an increase in high-profile films and series available directly on Netflix.

The final word has yet to be spoken

The acquisition involving Warner Bros. must still obtain approval from antitrust authorities before becoming effective: a process that will require 12 to 18 months and whose outcome is far from certain. Netflix must also provide broad guarantees that the two companies will continue to operate sufficiently separately, avoiding the creation of monopoly situations—both in the movie theater market and in that of streaming.

If the operation were blocked, Warner might even find itself no longer needing to look for a buyer. A clause in the agreement states that, in the event of non-approval by antitrust authorities, Netflix would still be required to pay Warner 5 billion dollars: a sum that could finance at least a dozen major films. For this reason, some commentators have speculated that Warner does not truly believe the acquisition has a chance of being approved, and is simply aiming to collect that penalty.

Furthermore, following the agreement between the Netflix board of directors and that of Warner Bros. Discovery, the U.S. multinational Paramount Skydance has announced—addressing shareholders directly through what is known as a “hostile takeover bid”—its intention to pay 30 dollars per share for Warner Bros. Discovery stock, reaching an overall valuation of the company at around 108 billion dollars. The statement accompanying the hostile takeover bid explicitly references the complex approval process that Netflix may have to face, particularly in relation to antitrust regulations designed to prevent abuses of dominant position by major operators.