Netflix Acquires Warner Bros. Discovery for Content Aggregation

Key Quotes

"I think a lot of us assumed larry and david ellison would end up owning all of warner brothers discovery how did netflix get this deal they offered uh more money i guess or or about the same money yeah no uh it started with the ellisons making not a hostile approach but an unsolicited approach they made three different offers all of which were rejected by warner brothers discovery"

Lucas Shaw explains that the Ellison family's initial attempts to acquire Warner Brothers Discovery were unsuccessful, as their offers were rejected by the company's board. This highlights that the acquisition process was not straightforward and involved multiple rejected proposals before Netflix emerged as the successful bidder.

"I think in part because it was evident that the messaging we were getting from the warner brothers board and from david zaslav was that they didn't want to do the paramount deal I think there was a feeling that maybe the paramount side was a little bit overconfident in their ability that they were the only ones who could get the it approved through the regulatory um they were confident because the paramount bid was all cash and netflix is involved a little bit of stock"

Lucas Shaw suggests that Warner Brothers Discovery's board, led by David Zaslav, was hesitant to accept a deal with Paramount. Shaw posits this hesitation stemmed from a belief that Paramount's all-cash offer might face fewer regulatory hurdles than Netflix's offer, which included stock, indicating a strategic consideration of regulatory approval in the negotiation process.

"The honest answer because i've been asked that a lot today is i don't know like asking me to predict what donald trump is going to do or anyone to predict what he's going to do is a fool's errand but it would make sense that there would be regulatory review of this deal do i think that the doj is going to sue to block it as they did with at t time warner in the first trump administration i'm having a hard time"

Lucas Shaw expresses uncertainty regarding the regulatory approval of the Netflix-Warner Brothers Discovery deal, particularly concerning potential actions by Donald Trump and the Department of Justice. Shaw notes that predicting Trump's actions is difficult but acknowledges that regulatory review is likely, drawing a parallel to the AT&T-Time Warner merger during the previous Trump administration.

"I think all along paramount and the hollywood community in general thought that like netflix was flirting but wouldn't actually do it as recently as thursday the day that this all went down people were asking me on twitter linkedin threads like netflix is really just trying to do this to drive up the price right and clearly they were more serious about it than anyone thought"

Lucas Shaw points out that many in Hollywood, including those at Paramount, underestimated Netflix's seriousness about acquiring Warner Brothers Discovery. Shaw indicates that even on the day the deal was finalized, there was speculation that Netflix was merely attempting to inflate the price, underscoring the surprise and unexpected nature of Netflix's commitment.

"I think it's a little bit of both I think that they have they've been reasonably consistent in recent years that the type of big deal that they would do is if they could buy library and a catalog and and they don't want cable networks right they don't want legacy infrastructure because of the way that warner brothers is go have split the company and going about it they now said well we can get warner brothers and hbo and we don't have to take any of the networks that is appealing to us"

Lucas Shaw suggests that Netflix's decision to pursue the Warner Brothers Discovery acquisition is driven by a combination of factors. Shaw explains that Netflix is interested in acquiring valuable content libraries and catalogs without the burden of legacy infrastructure like cable networks, finding the opportunity to acquire Warner Brothers and HBO appealing due to the exclusion of less desirable assets.

"I think the truth is is that most people in hollywood today are just truly freaked out because they didn't think this was going to happen"

Lucas Shaw concludes by stating that the prevailing sentiment in Hollywood is one of significant unease and shock. Shaw attributes this widespread fear to the unexpected nature of the Netflix-Warner Brothers Discovery deal, implying that its occurrence defied industry expectations and has created considerable uncertainty.