Netflix’s $72 billion Hollywood bet: What you need to know

By Brian Stelter, CNN

This is a David and Goliath story – with a twist. Almost exactly 15 years ago today the owner of Warner Bros. and HBO pushed back on Hollywood and Wall Street hype about a streaming upstart named Netflix.

The 2010 quote from Jeff Bewkes in The New York Times is now infamous: “It’s a little bit like, is the Albanian army going to take over the world? I don’t think so.”

Well, as LightShed Partners analyst Rich Greenfield said Friday, “the Albanian army just took over the world.”

Here’s what you need to know about Netflix’s $72 billion deal for Warner Bros. and HBO.

What’s the deal?

Warner Bros. Discovery, which owns CNN, is moving forward with its plans to split into two publicly traded companies.

Once the split takes effect, likely sometime next summer, Netflix intends to acquire the Warner half. The other half, Discovery Global, will house CNN and other channels.

Netflix, already the streaming king, says “this acquisition will improve our offering and accelerate our business for decades to come.”

But first, Netflix has to convince governments around the world to OK to deal. The regulatory review process is going to take a long time – in the US, EU and elsewhere.

How will this change my streaming experience?

Most people who have the HBO Max streaming service also have Netflix. It is unclear what will happen to HBO Max, but history suggests that it will be folded into Netflix’s service in one way or another.

Netflix says that “by adding the deep film and TV libraries and HBO and HBO Max programming, Netflix members will have even more high-quality titles from which to choose.”

Some lawmakers and regulatory experts are already expressing concern that Netflix will pass along higher costs to consumers.

How did we get here?

Warner Bros. Discovery put itself up for sale a couple of months ago after Paramount made unsolicited bids for the entire company. Then Netflix and Comcast emerged as rival bidders for the studio and streaming assets.

Paramount was thought to be the frontrunner in the auction. Paramount CEO David Ellison’s allies exuded confidence about their merger proposal – and their mutually beneficial relationship with President Donald Trump. But things clearly changed in recent days.

Paramount’s December 3 letter to the WBD board expressing “grave concerns” about the auction process was a possible precursor to a hostile-takeover play.

Officially, Paramount is not commenting on the Netflix deal. Unofficially, Paramount is plotting how to fight back.

What happens next?

Every mega-deal like this gets closely scrutinized. This one probably more so.

On Friday CNBC quoted an anonymous senior administration official saying the Trump administration is viewing the deal with “heavy skepticism.”

Netflix’s plans could be held up for months, and even years, in Washington, DC, either by Trump loyalists carrying out his wishes or by bureaucrats with genuine objections to media consolidation.

Trump can make the process more painful, but he does not get a literal veto. Remember when the Justice Department in 2017 sued to stop AT&T’s acquisition of the aforementioned Time Warner? The companies fought the case in court and prevailed.

Netflix seems willing to stomach a similar legal battle. Or, at the very least, willing to go through the motions – and keep Warner Bros. out of Paramount’s and Comcast’s hands for a long while.

Indeed, the Trump administration intervention in 2017 had the effect of slowing down HBO at a time when it desperately needed to speed up its competition with Netflix.

Also: The US is just one of many markets that will take a close look at the transaction. European regulators also will have a lot to say.

What will Netflix tell regulators?

Netflix will argue that it’s really not a Goliath at all, not in a Big Tech environment comprised of players like Google and Amazon.

Netflix views Google’s YouTube as a primary rival for attention now, and for good reason, given that YouTube viewership has been growing by leaps and bounds.

“With Google increasingly entering the market, this deal may serve as a strategic blocking and tackling maneuver,” Melissa Otto, head of research at S&P Global Visible Alpha, pointed out.

Netflix will also claim that it is creating “more opportunities for the creative community,” though many in Hollywood won’t buy that.

More practically, people on Netflix’s side might say that further industry consolidation is inevitable, given changing consumer habits and shifting business models for old-line media companies.

What does this mean for CNN?

WBD is moving ahead with its breakup plan, which means that CNN will become part of a newly formed company called Discovery Global next year.

Channels like TNT, Discovery and free-to-air channels across Europe will also be part of Discovery Global. And they’ll operate separately from Warner Bros., which is the side of the house that Netflix intends to buy.

“We’ll continue to work with future Discovery Global CEO Gunnar Wiedenfels and the rest of his team to make sure that the new company gets off to a flying start,” CNN CEO Mark Thompson said in a memo on Friday.

Thompson said both WBD CEO David Zaslav and Wiedenfels “are firm backers” of CNN’s strategy, including the recent rollout of the CNN All Access subscription service. “We’ve already agreed to a 2026 budget which includes increased investment for the plan,” Thompson said.

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.