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Last week, the mega deal seemed to be over: Netflix was supposed to take over Warner Bros. for $83 billion. Today, billionaire and Trump friend Larry Ellison’s competitor Paramount is putting a higher offer on the table. Billionaire poker is about nothing less than the future of Hollywood, as business editor Andreas Kohli assesses.
Why is Warner Bros. Discovery for sale?
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The company is a pearl, with an almost inexhaustible treasure trove of intellectual property, with rights to classics like “Casablanca” and TV series like “Game of Thrones”. The group also owns the streaming service HBO Max with its 130 million subscribers, which will also be available in Switzerland from January. Warner Bros. has been looking for a way out of its own dilemma with high debt burdens and difficult market conditions for some time. This recently resulted in a bidding war with three parties: The streaming giant Netflix, the film giant Paramount and the telecommunications and entertainment group Comcast want to grab Warner Bros.
How do the takeover offers from Netflix and Paramount differ?
Last week everything looked like Netflix was coming along. Netflix offered 83 billion, but “only” for TV and film studios and the streaming division, but without associated television channels such as CNN. Paramount is now offering $108 billion for the entire group. Paramount is owned by Larry Ellison’s billionaire family, which has good relations with US President Trump. According to observers, Trump could have an interest in Paramount emerging as the winner of the bidding war – because CNN would then belong to his friend Ellison. CNN often reports critically on Trump’s policies. In fact, Trump expressed skepticism about the Netflix offer, but justified this by saying that Netflix could gain too much market power.
How does the industry view the bidding war?
Filmmakers are alarmed and expressed their anger at the Netflix announcement last week. James Cameron spoke of a “catastrophe”, Oscar winner Jane Fonda of a “constitutional crisis that could destroy this creative industry”. Behind this is also the fear that tech efficiency could destroy the last spark of magic in the film industry. In today’s announcement, Paramount promised to bring dozens of new films to cinemas in the event of a takeover – a swipe at Netflix management, which has made streaming a big alternative to cinema. And the strike from two years ago is still remembered: actresses and screenwriters in the USA took their anger over the use of artificial intelligence to the streets.
What will happen to consumers if a takeover takes place?
Regardless of whether Paramount or Netflix wins, competition is decreasing, which is generally not desirable from a consumer perspective. Less competition means less pressure to bring new things onto the market. Especially since enormous sums are involved: 83 or 108 billion dollars. Netflix and Paramount have to capitalize on this money first – they would probably invest less money in innovation. Less competition also means less pressure to keep prices low. Netflix’s handling of subscription prices in Switzerland shows its pricing power: Netflix subscriptions have become more expensive several times.
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