What Paramount, Comcast, Netflix could do with the assets
General views of the Warner Bros. water tower on the Warner Brothers studio lot in Burbank, California, on June 24, 2022.
Aaronp/bauer-griffin | Gc Pictures | Getty Images
It’s no surprise that some of the most popular film and television content has been available for over a century. Paramount Skydance, comcast And netflix They are bidding for Warner Bros. Discovery’s entities.
In September, Paramount officially signed WBD flagship Warner Bros., which had announced plans months earlier to split itself into two companies to explore a sale process. He made the first offer to buy Discovery.
WBD’s plans mirrored Comcast’s; was separating its cable networks from its movie properties and streaming service HBO Max.
The acclaimed content library includes series like DC’s superheroes, Harry Potter, Lord of the Rings, Game of Thrones, Looney Tunes and Scooby-Doo. It is also the distributor of Legendary’s Dune series and the Godzilla and King Kong films. Cable networks include CNN, TNT, TBS and TruTV.
Warner Bros. Discovery aims to complete the sales process by mid-to-late December. The company received a second round of offers from potential buyers earlier this week, according to people familiar with the matter who spoke on condition of anonymity citing internal processes. As of Wednesday, Warner Bros. Discovery was still evaluating bids and it remained unclear whether there would be another round of bidding.
“All three candidates could potentially be beneficial, which is why Warner Bros. could be such an attractive buy,” said Shawn Robbins, director of analysis at Fandango and founder of Box Office Theory. “But the potential is not enough. Resources, experience and proven execution ability need to be evaluated.”
Here’s what each suitor can do with their WBD assets.
combing peacock feathers
Comcast is in the process of expanding its cable network portfolio, which includes CNBC, but will retain broadcast network NBC, streaming service Peacock, movie studio Universal and theme parks.
Considering its exit from the cable TV business, Comcast is looking to replace Warner Bros. It’s not interested in Discovery’s massive portfolio of networks. That’s why Comcast’s offer includes a clause that would allow WBD to spin off its cable networks at any point before the proposed acquisition closes. CNBC previously reported.
Warner Bros. Discovery’s intellectual property will provide the fastest support to NBCUniversal’s Peacock. The streaming service lags far behind its peers in terms of subscriber numbers; As of September 30, it only has 41 million customers. The platform has focused on sports programs but is lacking in original content.
Outside of superhero fare, WBD’s television content could boost NBCUniversal’s streaming service Peacock with shows like “IT: Welcome to Derry,” “The Pitt,” “The Last of Us” and a pair of shows from the Game of Thrones universe.
Warner Bros. Adding Discovery’s IP to the fold will allow Universal to increase its number of popular franchises, flood its streaming service with television content and expand its theme park business.
“For Comcast, this will add to the depth of Universal’s existing roster, which already combines a healthy balance of intellectual property with more daring, often original content,” Robbins said. “They tick so many necessary boxes without asking any questions.”
Universal currently owns a large collection of franchise intellectual properties, including Jurassic Park, Fast & Furious and Despicable Me, as well as a number of popular horror films.
“Comcast has a pretty good slate of movies,” said Doug Creutz, senior media and entertainment analyst at TD Cowen. “They’re trying to build Disney Prime piece by piece, and I think having a superhero brand would be another step in that direction. I don’t know that it’s something they particularly see as a strategic imperative. I think having more intellectual property in general is something you always want, of course.”
Warner Bros. Discovery’s DC Studios, currently under the management of James Gunn and Peter Safran, is preparing for multiple theatrical releases as well as upcoming TV series. The couple’s first film, “Superman,” released in July, grossed more than $600 million worldwide and received positive reviews from critics.
The nominees include a Supergirl movie, a Superman sequel, Matt Reeves’ second Batman movie and a Clayface feature film. On the television front, DC has plans for shows centered around the Green Lantern Corps; Wonder Woman’s Amazon island origins; and lesser-known but fan-favorite comic book characters like Booster Gold.
Comcast and Warner Bros. Discovery already has some shared IP. NBCUniversal parent licenses the rights to Wizarding World’s theme parks. Owning the film and television rights to Harry Potter will allow the company to take greater control over production and how it is reflected in journeys, experiences and merchandise.
“If you have authority over theme parks as well as film and TV production, there are synergistic opportunities that you can delegate,” Creutz said.
Disney This is the outline of the strategy. The company’s portfolio of intellectual property has been a staple of theme parks since the first location opened its doors in 1955. Disney controls not only content production but also how themed experiences are curated.
Agile Netflix
Netflix, the most surprising bidder of the bunch, is similarly looking solely at WBD’s streaming and studio assets.
After all, Netflix co-CEO Ted Sarandos reiterated this at the company’s meeting: October’s third-quarter earnings showed that the company “has no interest in owning legacy media networks.”
Initially, analysts and industry insiders predicted that Netflix would be sold to Warner Bros. They suggested that its interest in Discovery was simply an effort to raise the price of rivals looking to acquire WBD assets. But the streaming giant submitted mostly cash bids and remains a competitive bidder, sources told CNBC.
The broadcast giant can also seriously benefit from WBD’s content library.
As a relatively new player in the space (Netflix didn’t release original content until 2012), the company has taken time to establish its franchises. That’s why Netflix didn’t even establish a sales division until 2019, and it didn’t have an official online store until 2021.
It now has a handful of strong intellectual properties, including “Stranger Things,” “KPop Demon Hunters,” “Bridgerton,” “Wednesday” and “Squid Games.” Like Comcast, access to hit series with built-in audiences would be a huge boon for Netflix.
But industry experts are more interested in how the company will handle WBD assets, which have traditionally been released in theaters.
“For Netflix, it’s less a question of how this will benefit them and more a matter of how they handle the legacy of Warner Bros., especially theatrically,” Robbins said. “The money will definitely be there, yes, as it was with the premiere. So will their ambition be to act more like a traditional movie studio than they’ve shown so far?”
Netflix has long opposed releasing movies theatrically, doing so solely to stay in awards contention, please high-profile directors or capitalize on compelling titles. The streamer has always maintained that its content should be made available to its subscribers through the Netflix platform and has limited the time it will be released in cinemas.
This strategy allowed Netflix to avoid costly marketing campaigns, which are generally estimated to be around half the amount spent on the production budget. But this also often puts the company at odds with its theater partners. The company also does not share box office data provided by traditional movie studios.
“Many in the industry feel that Netflix’s acquisition of Warner would be the death knell for the film industry’s most important aspects, its properties, and its long-standing traditions,” Robbins said. “Netflix will need a significant turnaround to even begin to ease that sentiment.”
Netflix, Warner Bros., people familiar with the matter told CNBC. He told Discovery management that he would honor contractual agreements to release films theatrically if he could secure a deal to claim his assets.
Paramount Plus
Things are moving quickly at Paramount.
The company recently merged with Skydance, and in short order, the company’s new CEO and president, David Ellison, signed creative and top talent, greenlit new franchises, and achieved great success. $7.7 billion deal for live UFC rights
This strategy was somehow laid out. open letter Ellison released the release in early August in which he told investors that Paramount would invest in “high-quality storytelling and cutting-edge technology” to help “define the next era of entertainment.”
Ellison became the next Warner Bros. He hopes it will involve the acquisition of all of Discovery.
“Paramount has struggled in recent years to deliver the same kind of consistent, top-tier franchise output as some of its rivals,” Robbins said. “There’s a strong argument that has piqued Warner Bros.’ interest.” The library will move the needle more materially, pound for pound.”
Paramount has a number of franchises like Star Trek, Transformers, Sonic the Hedgehog, Paw Patrol, and SpongeBob SquarePants, but much of its theatrical success is due to one actor in particular.
“Paramount’s most important IP by far is a 63-year-old guy who makes his own shows,” Creutz said. “Maybe they’ll make an AI version of Tom Cruise and we’ll keep making Tom Cruise movies for the next 100 years. But the next step for them will be Star Trek.”
Before the Paramount-Skydance merger, the studio was releasing about eight movies a year, Ellison told investors during the company’s third-quarter earnings in November. The new goal is to have at least 15 films released in theaters in 2026.
So far, next year’s slate includes about 10 games; some of these are produced solely by Paramount, some as part of the studio’s distribution deals. Most studios update their calendars throughout the year as new independent films become available, especially during film festivals. Warner Bros. Acquiring Discovery and its theatrical roster would allow Paramount to easily surpass its goal.
But Creutz noted that generally when studios merge, the number of films tends to decrease in the following years.
“If Warner merges with any of these other companies, you’ll see a similar dynamic on the film side, you’ll see a similar dynamic on the TV production side, and you’ll probably see a similar dynamic no matter what they do on the streaming platform,” he said. “There is likely to be a convergence of streaming platforms in all three cases, which will likely result in less content for consumers.”
Where Paramount differs from rival offerings is that it wants all of WBD, including the cable networks. It’s worth noting that CNN will strengthen Paramount’s news coverage, which already includes CBS, and the addition of TNT, TBS and TruTV will be a major boost to the company’s sports coverage.
Live sports rights are limited and only available when previous agreements expire. Apple It has already emerged as the future home of Formula 1, and Major League Baseball is waiting for its deals to expire after the 2028 season to retool media packages. This means Paramount will have very few high-end sports assets to bid on and acquire in the medium term.
Meanwhile, Warner Bros. Discovery has the rights to broadcast basketball games from the French Open and NASCAR, as well as the National Hockey League, Major League Baseball and NCAA March Madness.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become CNBC’s new parent company, based on Comcast’s planned Versant spinoff.
— CNBC’s Julia Boorstin, Lillian Rizzo and Alex Sherman contributed to this report.
