On Dec. 5, Netflix announced that it would acquire Warner Bros. Discovery’s film and streaming assets in a deal worth $72 billion. Paramount Skydance continues its struggle to compete in the battle for Warner Bros. assets, largely thanks to the $40.4 billion put towards their acquisition by centibillionaire Larry Ellison, the father of Paramount chairman and chief executive officer David Ellison. Though both Netflix’s and Warner Bros’ boards of directors have approved the deal worth $72 billion, the deal must pass several waves of regulatory scrutiny before it can be finalized. Netflix also faces the challenge of hostile counteroffers even after Warner Bros. Discovery announced it would reject Paramount’s substantial bid.
Netflix sported a revenue of around $39 billion in 2024, a 15.7% increase from 2023, according to Business of Apps’ David Curry. Since launching its streaming service in 2007, Netflix has conquered competitors, including Blockbuster in the 2010s, as well as Comcast and potentially Paramount, depending on the outcome of the expected deal. Warner Bros. Entertainment has produced many popular films, including “The Batman,” “Sinners,” the “Harry Potter” series, the “Dune” films and many others. Warner Bros. Discovery’s revenue has consistently declined over the past two years, a trend that helps to contextualize how such an iconic media producer found itself in yet another merger situation.
In the streaming age, mergers and acquisitions have become common. In 2019, Disney negotiated a takeover of 21st Century Fox’s assets in a deal worth $71.3 billion. Mergers often seem advantageous for the consumer: if each streaming service can charge its own bill for its exclusive offerings, then the bringing together of services means a wider pool of available resources for just one cost, right? Yes, but there’s a catch.
Companies recognize how an acquisition makes their services more valuable to the consumer and how to justify an increase in their rates based on that value. In 2019, Disney charged subscribers just $6.99 per month for Disney Plus. On June 9, Disney gained full ownership of Hulu, and soon after, on Sept. 23, the company announced a 16% increase in its rate, from $9.99 to $11.99 per month. In the 5 and-a-half years since Disney acquired 21st Century Fox’s assets, Disney+’s costs have almost doubled. Netflix has increased its rates five times since 2015, and it currently costs consumers (monthly) $7.99 with ads, $17.99 for a standard plan, and $24.99 for a premium plan. Netflix introduced ads to its streaming service in 2022, angering some subscribers by abandoning the commercial-free tradition that the company called a “deep part of [its] brand proposition.” Netflix already charges a premium for its plans, so the consumer should be concerned about any excuse to charge more. The trend of increasing rates for streaming services has gone hand-in-hand with the concentration of entertainment assets. Modern consumers must pay more attention to merger events to remain on top of their budgets.
Unfortunately, consumers face more disadvantages than just increased rates. As noted by Tom Harrington, head of television at Enders Analysis, the Netflix and Warner Bros. merger could lead to considerable cuts in television and film output due to the typically slow process of organizing a massive newly-merged company. When companies combine, they become vulnerable to suffering the same administrative inhibitions that lead to an even lesser output, meaning less new content for consumers of a streaming service.
Regardless of what company acquires Warner Bros. Discovery’s assets, a merger is sure to happen, and hundreds of millions of consumers will likely see an increase in their rates.
Junior Charlie Burns is the Editorials Editor. His Email is cburns1@fandm.edu.