Why Netflix Wants WB — And Why MAGA, Actors & Old Hollywood Are Freaking Out

0:00 Of course we stream once a week and of course the day after we stream Thursday at 8 p .m. Pacific time big huge news breaks the next day Which annoys me because then we can't talk about it on stream So We have been talking about and covering this story for a while Warner Brothers had said hey, we're open to the idea of an acquisition yada yada yada And then there was some informal bids made by Netflix and Paramount and Comcast. And then Paramount sent a really stupid letter the day before this was announced to Warner Brothers being like, well, there's some shenanigans going on and we're close to the administration. Be ashamed if anything happened to this deal. Well, the deal is happening. And I'm putting that in air quotes for right now. December 5th, Netflix and Warner Bros. announced that they have come into a definitive agreement under which Netflix will acquire Warner Bros. including its film and television studios, HBO Max and HBO. This is from the Netflix press release. The cash and stock value of this transaction $7 .75 per share for a total enterprise value of $82 .7 billion.

1:19 dollars the deal is expected to close after the previously announced separation of WBD's global networks division, which is like discovering all those channels, into a new publicly traded company, which is expected to complete in Q3 of 2026. So again, we have been talking about this one for a long time. We've kind of gone back and forth on this. I think privately you and I were both kind of hoping Apple was going to make kind of an 11th hour offer, given the stuff that Apple and Warner Bros. done together and Apple has the money. That didn't happen. Netflix got them. So just before we get into what Netflix is saying, obviously there's been a lot of reaction on the internet about this.

2:00 And we don't want, we're not trying to be the typical reaction. Like I don't want to just be like, this guy is falling. So Jay, first, what was your first like reaction when you heard this news? And then kind of now that you've simmered on it for a second, what is your first thoughts about this? Yeah, so my first first reaction is like pretty much there are worse companies to acquire right like we talked about this a Week ago two weeks ago. Like we did not want paramount to acquire WB. So that hasn't happened yet. Obviously, you know as you mentioned, they are really close to the Trump administration.

2:46 So we'll see how that actually plays out. But yeah, my initial reaction was like, okay, could be worse. Could be worse. Yes. And yeah, we were both of the opinion that Paramount getting it was bad. Now, again, to clarify both Jay and I's kind of general philosophy on consolidation and stuff like that. I don't like corporate consolidation. I think it's bad for every industry. I think Jay agrees with that statement, right? We were not fans of anybody acquiring WB, but we also live in reality, right? And WB is a publicly traded company and these things happen and they have a fiduciary duty to their shareholders, et cetera, et cetera, et cetera. So as much as we would like for them to not be acquired. We knew that was not going to happen weeks ago.

3:33 It was going to happen. Paramount's recent moves and kind of what Ellison's doing and how close they are to the Trump administration. Dick in mouth would probably be an appropriate statement for what that is. Right. I. Yeah, we didn't want that. The the obvious downside to this obviously is that Netflix and Ted Sarandos their CEO has always been critical of theaters They don't do a lot Netflix very rarely releases their stuff at theater when they do they do it for short stints and it's kind of a gimmick Here's what Netflix is saying, okay? And again, this is all from their their press release, right? They're saying that this this helps Netflix Warner Brothers Studios are world class, which I don't think you can deny. HBO and HBO Max have an amazing brand as far as prestige television going all the way back to The Wire, The Sopranos, Sex and the City, Game of Thrones, The Last of Us, all those shows. They think it gives more choice and greater value. They think it will help the entertainment industry. That's debatable. More opportunities for the creative community. Again, debatable and more value for shareholders. Of that, I am I have no doubt. More value for the shareholders, I'm sure. Let's take the optimistic view. What Sarandos has said is that Warner Brothers will continue operating independently, right?

5:02 They've said that the creative teams like DeLuca and Abdi, James Gunn and Peter Safran, et cetera, will stay in place, right? Which is good. I think that those are good moves. We also covered this earlier this year. Warner Brothers set records this year. Warner Brothers had how many how many films over 40 million in a row? Seven consecutive films this year that opened to more than 40 million dollars at the at the box office. Right. Everything from Minecraft to Superman to Conjuring. opened above 40 million dollars, weapons opened above 40 million dollars. So the the the the non pessimistic view of this is and I think, Jay, you would agree with this. Netflix doesn't know how to make movies.

5:56 Their movies are terrible. And they overspend on that electric state movie with Chris Pratt was 300 million dollars they spent on that. That's ridiculous. What was the other one? They're just not good at making movies, okay? They also have never had a distribution pipeline, so even if they would have wanted to put it in theaters, they don't know how to do it. What they're getting with Warner Brothers is a distribution pipeline and a whole big history of successful film. So, to me, the optimistic view is that Sarandos is going, look. We don't know how to release movies in theaters. We know that people want us to do it They'd already Netflix had made the deal with Greta Gerwig that Narnia movies coming out in theaters Right now that you add Warner Brothers to that mix. What does that change for that movie, right? There's so that's the optimistic views that they that Netflix is looking at this and going we don't know how to do this So instead of trying to invent it whole cloth we're gonna We're going to buy somebody who knows how to do it. The other optimistic view of this is that they're not killing a studio. If Paramount and Warner Brothers merge or Comcast Universal and Warner Brothers merge, we're down one more studio.

7:15 That's one less of the major studios. Netflix is in a studio, not really. And so we didn't lose anything from that perspective. What are your thoughts on that kind of like that optimistic view? Yeah. I 100 % agree with that. I'm also trying to real quick, I'm going to pull up an example that I learned about an NBA school. Yes, so I, I do agree with that. And also, it's not uncommon for companies to buy other companies and then just, they might change their process and procedures to make them more efficient or profitable, but They keep that company running in place. So, for instance, if you pull up a chart of who owns what beer companies, you'll see that the same company that owns Bush Light, Natural Light, Bud Light, like they're all owned by the same company. A .B. and Beth. Yep. And then also Modelo is owned by the same company that owns Pacifico and Corona. Like it's very common. And I think Netflix isn't going to Acquire WB and then just kill WB just not have them release movies on the movie theater I think they're going to acquire net acquire WB and then just let WB continue operating But then they have their funnel to get their movies into theaters and and also funnel everything to Netflix, right? You're never gonna see a Warner Brothers movie on peacock

8:47 ever again I'm joking mostly about that. Those guys cross -pollinate all the time Okay So that's kind of the optimistic view. Now the other thing that we gotta look at is, is this gonna actually happen? Because yes, while the deal has been announced, the other thing that nobody's talking about is, will this deal actually happen? So Jay, you've got some notes about the next steps, right? So run us through the next steps. Yeah, so they do have to do what is called an HSR filing with the Department of Justice Then the Department of Justice has 30 days to do an initial review and most likely they're going to file for an extended review And then all they have to do is just sit on their hands. They can sit on their hands for a year or longer They don't have to do anything with it And why would they do that?

9:46 There's a lot of people looking at this deal So you have traditional old Hollywood that doesn't like this deal. You have the Ellison's, obviously the Trump administration. You got actors, you got state attorney generals who are looking at this from a consumer perspective. And right now, I think everyone's trying to decide like who is on what side. And also keep in mind a co -founder of Netflix, Reed Hastings. Hastings. Hastings. It has been very anti Trump and has put a lot of money and support into governor Newsom So and you can you can see this in this initial news report from CNBC where it was breaking.

10:27 We'll show you that now We got regulation to worry about and approvals not just here in the states, but elsewhere Let's bring in Amon Javer's David stick around Amon as for the president Whether he wants to disrupt this deal and we know about his ties to Ellison's father talk a bit about that, too Yeah, Carl, we're getting some news here our first reaction now from the administration I was just in contact moments ago with a senior administration official who tells me that the administration's view of this deal can be characterized as heavy skepticism So even if even if they want this deal to go through you're right they can sit on this for a year now Do I personally think that Ted Sarandos and David Zaslav will show up at the Oval Office bearing out a white Netflix or gold Netflix logos and give them to the president? Yeah. And we've talked about this a lot. Trump listens to whoever the last guy that talked to him was. And yeah, I'm sure this is pissing the Ellisons off. I'm sure they're going to sue over this. So again, you have the HSR, which is a 30 -day, then they go, OK, we actually need more than 30 days to look at an $82 billion deal. They do the extender review. And then if the Ellison's and or Comcast Universal decide to sue Netflix and Warner Brothers over the process, then this. Then if the Federal Trade Commission goes, no, you can't do it, then Warner Brothers and Netflix sues the DOJ and the Federal Trade Commission. And that one probably has to go all the way to SCOTUS. to determine

11:59 if it's an antitrust violation. That being said, under any other administration, I'd be like, yeah, you might get him on antitrust. The thing I think saves this from antitrust is the thing that would have killed it if Paramount or Universal got it, which is you're already movie studios. Netflix has a strong argument from a trade perspective, from an FTC antitrust perspective to say, we're not like the other guys. We're a tech platform, man. That's what we are. And so we're going to acquire a studio now. I'm with you, A, even at the soonest that Netflix is saying, Netflix is saying Q3, 2026. So almost a year from now. Then you've still got the Federal Trade Commission, the Department of Justice, the Antitrust Division, the Department of Justice, the Trump administration, and everybody else who's going to stick their fingers in this whole thing. And so while it's interesting that this deal has been made, right?

13:00 A, I don't think there's any guarantee it's going to happen. Do you? No. And I do want to go back and touch on a point that you you actually brought up about free trade. If this trade does not go through, this actually impacts free trade by a lot. I mean, from my understanding, Paramount offered less But also wanted CNN Netflix offered more without CNN So for them to go back and say like Netflix isn't going to get this deal and then it should go to Paramount is I think this is hugely like disturbing for the open market It is especially given the moose and this is one of the reasons you and I talked about we didn't want Paramount to get it Was when they acquired when when Skydance acquired Paramount?

13:56 Ellison made some very controversial moves over at the CBS News division By putting Barry Weiss in charge of the CBS News division and there's been some questions about what's going on over there right now to the point where and we talked about this to the WGA which also represents on -air news people was like they were getting emails from Barry Weiss going what do you do very dogey emails and And and the WGA was like, don't answer those emails. Don't. Not until we know what's going on. Right. So, yeah, I'm. Top of my head, I still think it's a coin flip whether this deal goes through. Yeah. Obviously, the Ellison's are going to try to cancel it. They're in line with. the Trump administration. So I agree. I think it is. But I think Trump can be bribed by Netflix and Warner Brothers if they really want to do it. Yeah, that's that's also true.

14:59 So, yeah, it's not. This is really interesting. You know, it's the announcement was made, but then like nothing is really set in stone as of right now. So. As as is normal. Right. These deals are not small. It's not like buying a house, you know, where you're closed in 45 days. This, you know, again, this is minimum a year from now. Now, again, on the on the pessimistic, you know, it is Netflix. Is it possible that Netflix is going to pull a Disney and what they just did with Hulu and just completely subsume HBO into their platform? Yeah, I think it's possible. Is it possible that Netflix, using the way that they have now, reduces the theatrical window from 45 to 30 days or even 15 days? Yeah, I think that's a problem. I don't want to downplay the people who are concerned about this move, right?

15:52 Because there are... There are concerns to be had. And a lot of the optimistic side is you don't think Ted Sarandos is full of shit, which is debatable at best. Wouldn't you agree? Yeah, 100 percent. I do agree. So. Obviously, we've been covering this one for a while. We'll continue covering the story. If you want to see more about it, we stream every Thursday at 8 p .m. Pacific Time right here on our YouTube channel or over on twitch .tv slash error code show so you can get our live stuff. If you want to interact with us directly, you can interact with us directly right there. But we're curious what you have to say about this. Is it a good thing? Is it a bad thing? Are we blowing everything out of proportion? Do we even think it's going to happen?

16:38 Right. Who knows? Let us know what you think in the comments below.