Netflix reportedly closes in on Warner Bros deal

Netflix is ​​close to a deal to buy Warner Bros Discovery’s movie and streaming business, according to multiple reports.

The streaming company has emerged as the top bidder for Warner Bros, beating rivals Comcast and Paramount Skydance after offering $28 (£21) per share, according to several outlets including Reuters and New York Times.

Paramount made an initial offer to buy the entire company, including its cable networks like CNN, for $24 a share in October, an offer that Warner Bros. rejected before putting itself up for sale.

Paramount’s lawyers questioned the “fairness and adequacy” of the sale this week, in a letter seen by CNBC.

Paramount made a renewed offer at a price approaching $27 per share on Thursday. CNN reported.

Warner Bros. owns franchises including Harry Potter, Game of Thrones and the streaming service HBO Max.

Netflix, Warner Bros. and Paramount have been contacted for comment.

Emma Wall, chief investment strategist at Hargreaves Lansdowne, said the takeover battle was “drama for the people who create the drama”.

Speaking on the BBC’s Today programme, she said it was important to note the difference between the Paramount and Netflix offers, noting that Paramount’s offer includes parts of Warner Brothers’ business that “hinder profitability”.

“The Netflix show is only for parts of the business, and those are the parts of the business that do well,” she said.

Ms. Wall said Paramount took the unusual step of accusing Warner Bros. of favoring Netflix in the process. Paramount also said the streaming platform’s offer was not a good deal for Warner Bros. shareholders because it would require breaking up the company.

“You kind of distort your presentation if you get into a disagreement,” she said.

According to CNBCParamount’s lawyers accused Warner Bros. of conducting a “short-sighted process with a predetermined outcome favoring one bidder.”

Whichever company buys Warner Bros., Wall said the U.S. competition regulator would likely intervene.

“Whether Netflix succeeds in this segment or actually comes back for more, this will create a massive global force in entertainment streaming that the regulator will want to look at,” she said.

Tom Harrington, head of television at analyst firm Enders, said it was difficult to gauge whether the deal would win regulatory approval, but if it went through it would have a huge impact on cinema.

“If implemented, it would redirect Hollywood, with one streamer acquiring works that many consider existentially antithetical to — Netflix has always had some limited use for cinema but its presentation generally undermines it,” he said.

Harrington said there would likely be “significant cuts” to television and film production from a combined entity, which could lead to resistance to the move from parts of Hollywood and related unions.

“HBO, a creative jewel, will be terribly at risk within Netflix, even though it has survived difficult owners for much of its existence,” he said.

For consumers, Harrington said the merger would likely lead to higher costs.

“Netflix will become more expensive, and although HBO Max will close/become non-essential, greater penetration of Netflix households will likely mean an increase in overall overall subscription revenue.”