Netflix won by “losing” the bidding war for Warner Brothers Discovery (WBD). The victory can be found in contemplating what Netflix was going to get in return for its purchase of WBD.
It wasn’t an expanded customer base. By various accounts, something on the order of 80 percent of HBO Max (owned by WBD) subscribers already subscribed to Netflix. As for news, opposite all the right-wing ranting about Netflix lusting for CNN to make it the “Obama News Network,” the reality was that Netflix wasn’t bidding for CNN in the first place.
To which some will say that the acquisition was about Netflix adding filmmaking capacity, the production lots, infrastructure and production know-how that a technology company formed in Los Altos, CA lacked. But even the loss of the Warner Brothers part of WBD and all its grandeur is difficult to look back on as truly problematic for Netflix and its future. Perhaps the opposite.
Doubtful? Consider a recent New York Times interview with actor Ethan Hawke about the changing nature of filmmaking. Hawke observed that the “biggest difference is the way the canvas size has changed. There’s so much talk about whether a movie’s going to be bought for theatrical release or Netflix, or whether you could make this a limited series.”
It’s worth thinking about the bigger meaning of what Hawke said. He was making the point that Netflix has something much more valuable than production lots: it’s on the mind of virtually every content creator in entertainment.
It speaks to how Netflix won by “losing” the battle for WBD. Holman Jenkins at the Wall Street Journal had alluded to the previous truth in recent columns that Netflix perhaps didn’t even want WBD.
As Hawke’s interview yet again made plain, Netflix is on the tip of every actor, director and producer’s tongue ahead of making a movie or television show. The latter isn’t true because Netflix is building filmmaking infrastructure or because it was potentially acquiring one of filmdom’s jewels, but because Netflix’s subscribers are much more valuable than the content they subscribe to Netflix for.
It raises questions about whether WBD would have been additive to Netflix, particularly at the price Netflix was ready to pay. Really, why go to great lengths to be a bigger player in production (does anyone remember “Heaven’s Gate”?), and all the challenges associated with placating prima donna actors, mercurial directors, and over budget producers, when all three yearn for your eyeballs?
Another question worth adding to the previous one has to do with what Netflix has lost in the past because it has lacked the traditional film and television production infrastructure that WBD has, and that Paramount Global won’t need (think looming layoffs at WBD)? Judging by all the Emmys and Oscars in the proverbial Netflix trophy case, not much.
Which speaks to Netflix’s resounding victory. Rather than having to placate the political powers that be in Washington in front of your politically divided subscriber base in order to spend $83 billion on an acquisition, Netflix can walk away from a political battle it likely couldn’t win, albeit with billions of unspent capital that can be used to purchase the best of the best television and film content from entertainment types absolutely panting for its unrivaled distribution capabilities.
Leave the costly vagaries of filmmaking to Paramount. And with the debt it's running up to complete the purchase, the Warner Brothers part of the WBD acquisition may soon enough become available to Netflix at a lower price as is, and as Paramount Global aggressively sells off duplication to pay down its debt.
