The case for NOT buying Warner Bros Discovery is compelling
It seems like every media columnist/blogger/newsletter writer has spent the past few weeks writing articles about the Warner Bros Discovery bidding process (first-round soft bidding closed on Thursday last week with Netflix, Comcast, and Paramount all filing bids).
I’ve steered clear of it outside of the occasional mention largely because what we see in the media is largely a lot of narrative setting and brinkmanship within the media by large companies with a lot of money on the line. You will not learn anything about strategy or perspective from any of these articles that delivers genuine perspective.
While we wait for a resolution to the bidding process (expected by Christmas), what I am much more interested in is what companies stand to benefit by NOT buying Warner Bros Discovery.
Netflix is reportedly interested in buying WBD for its movie studio, HBO, the library, Warner Bros Television, and off-shoots like DC Comics. What it doesn’t want is the linear TV channels business. But, why does it want the rest?
Since launch, it has shown a complete disregard for the movie theatrical business - it believes (rightly, I’d argue) that the future of video consumption… the long-term play… lies with Internet-enabled devices and not theatrical exhibition. So, what is the long-term value for Netflix in owning a movie studio exactly?
HBO will just get absorbed into the Netflix engine at some stage… like theatrical, Netflix has shown a resistance to branded verticals on platform and it seems unlikely that, long-term, Netflix has an interest in running a second streaming platform. So, what value exactly does HBO represent the business really?
The IP and library would be nice to have, but not essential. Netflix seems to be doing just fine without owning Batman, the Dukes of Hazzard, Tony Soprano, and The West Wing.
And a TV production company? I can see some value there, but is that and the IP/library worth US$60-65b? That’s a lot of money that could instead be spent on higher value, far cheaper acquisitions with a greater long-tail.
For example, I’ve always thought Netflix could get far greater mileage out of, say, owning the King Features Syndicate portfolio (think: Popeye, Flash Gordon, Mandrake, The Phantom - these are characters that feel more European and can be exploited for Netflix’s global network far more than American-centric programming) than it would something like DC Comics.
Apply that same logic to all manner of other TV production companies, distributers, and content libraries.
Paramount is looking to scale up its business with a Warner Bros Discovery acquisition. With the purchase, it can boost subscriber numbers, dramatically boost its library, and strengthen its global position across all of its business holdings.
But there’s also a lot of duplication happening there.
I see the argument that can be made for Paramount chasing WBD, but also it’s A LOT of money that could just be spent on other acquisitions that could help it scale. Just two weeks ago Paramount chief David Ellison made the case well for not buying WBD:
“It’s important to know that there’s no must-have for us. We really look at this as buy-versus-build, and we absolutely have the ability to build to get to where we want to go,” Ellison told Wall Street analysts when pressed about Paramount’s pursuit of Warner Bros. Discovery. “We believe we can achieve our streaming goals, and that we can drive enterprise efficiency, and create value and long-term free cash flow generation all through the building.”
The only real benefit for Paramount is being able to scale the business faster with an acquisition. Maybe that is worth the expense. I see the argument either way.
And then there’s Comcast, which, frankly, NEEDS Warner Bros Discovery. If it fails to get the purchase across the line, is there anyone who truly believes that Comcast will be able to scale up Peacock to go global, then also scale up every other part of the business to compete against, say, a supercharged Paramount Warner Bros Discovery (A Skydance Company)?
There’s a lot of money everyone could save and better spend elsewhere by not buying my beloved Warner Bros Discovery.
Why do I care about sponsors this year?
This morning Australian broadcaster Nine announced the headline sponsors on board for its coverage of the Milano Cortina 2026 Winter Olympics.
Spending a large amount of cash with Nine this year will include NRMA Insurance, Harvey Norman, Chemist Warehouse, Bupa, and GWM.
What interested me in reading the news this morning was that I was actually interested in knowing which companies are on-board as sponsors. Usually, I haven’t really cared.
So, why my 2026 interest? We are talking about the biggest TV event of the year in an industry facing financial pressure previously not seen in the local market with declining ad dollars. The Milano Cortina sponsors are the companies that still see value in a large scale TV spend. This is an event that doesn’t come cheap (though, it’s likely delivering a cheaper, greater bang for your buck spend than in previous years).
News Desk
I love the feeling of vindication I feel when a show I really despised gets cancelled after one season. Imagine the thrill I felt when Lena Dunham revealed this weekend that Too Much has been canned by Netflix after just one season. (“Despised” is too strong a word… but I really didn’t like it). Read: THR
Project Ada is a plan underway at the BBC to shrink its workforce and save £100M a year. Read: Deadline
With a Mandalorian & Grogu movie set to debut in cinemas, it would be weird to see The Mandalorian return for a fourth season, but apparently Jon Favreau says it has been fully scripted and is sitting in his desk. Read: Dark Horizons
Bill Maher went on a tirade against the much funnier and far brighter fello-HBO star Larry David on Real Time this weekend, still butt-hurt about David’s op-ed from a few months ago about choosing to have dinner with Hitler. Read: Deadline
As a reaction to Netflix doco Jeffrey Epstein: Filthy Rich, the multi-shirted Steve Bannon had been working with the aforementioned man (known for not wearing his pants as often as he should) on his own doco. Read: THR
53 million players have reportedly played the Simpsons x Fornite game in its first two weeks. THR has a look inside how the collab came together.
Donald Glover has revealed that he had a stroke last year. Read: BBC
Trailer Park
Stranger Things returns for its first batch of final season episodes this coming Wednesday.
Jim Gaffigan has released a stand-up special onto YouTube, which appears to be sponcon for his bourbon brand.
The Night My Dad Saved Christmas 2 debuts on Netflix Dec 5.
When the sneaky director of a toy company kidnaps Santa, it’s up to a father and son to rescue him and save Christmas from disaster.
That’s the newsletter for today.
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