LOS GATOS / LONDON (IT BOLTWISE) – Shares of Netflix recently experienced a decline after analysts questioned the potential impact of an acquisition of Warner Bros. Discovery. This potential acquisition could bring Netflix new content and brands like DC Comics and Harry Potter, but it also presents significant challenges.
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Recent speculation about a possible acquisition of Warner Bros. Discovery by Netflix has put pressure on the streaming giant’s shares. Analysts, including Morgan Stanley’s Benjamin Swinburne, expressed concerns about the strategic benefits and regulatory hurdles that such a deal could pose. While the Warner Bros. Discovery acquisition could give Netflix access to valuable content like DC Comics and the Harry Potter franchises, the question is whether the synergies are enough to justify the investment.
Swinburne emphasized that Netflix might get the least synergies from such an acquisition. In addition, the regulatory path could be particularly rocky, as US authorities would closely examine such a merger in the context of antitrust laws. The integration of Warner Bros. Studio assets could pose near-term risks, particularly when it comes to changing existing distribution strategies and delivering content directly to consumers.
Another aspect to consider is the possible closure of HBO and the integration of its content into the Netflix platform. Although this could lead to a loss of revenue in the short term, Netflix could benefit in the long term if the content on its platform can be better monetized. Still, the question remains whether Netflix’s long-term growth rates will be enough to cover the costs of such an acquisition.
Competition in the bidding war for Warner Bros. Discovery is strong, with Paramount and Comcast as other interested parties. While Paramount is the favorite, former US President Trump’s political views could pose additional challenges to Netflix and Comcast. Final bids are expected shortly and the industry is keenly watching to see how the situation develops.
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