Talking myself into a Netflix-Warner merger

Warner Bros., the storied American media conglomerate, is currently up for sale, but the company has been on an intriguing mergers and acquisitions journey for years now.

After re-emerging in the mid-aughts from the fiasco of the AOL-Time Warner merger1 and various divestments, it had a good run as a smaller conglomerate. This corporate entity paired one of Hollywood’s premier movie studios with a number of cable channels, notably including HBO (a creative powerhouse) and CNN (a major news brand).

Then in 2016, AT&T (a telecommunications infrastructure company) announced that it wanted to buy them. The Trump administration sued in court to block the merger, which I think was a lowkey fascinating story of recent American politics. On the one hand, a good amount of evidence indicated this was Donald Trump abusing his power to try to punish CNN for negative coverage. But on the other, you had people like obsessive Obama-hater Matt Stoller who hailed Trump’s actions as part of a bold and bipartisan new aggressive approach to antitrust policy that would free us from the shackles of neoliberalism.

At the time, I said that the deal was a business mistake.

There’s a long tradition of American business leaders deciding it would be fun to be the CEO of a movie studio. That’s how the oil company Gulf+Western came to own Paramount at one point and why Columbia Pictures (now part of Sony) was owned by Coca-Cola. AT&T’s ownership of Warner ended badly, and they spun the entertainment conglomerate out via a new purchase that created a new larger conglomerate called Warner Bros. Discovery.

This company has had some success recently as a movie studio,2 but I would say it’s failing at its main strategic objective, which was to compete head-to-head with Netflix.

Way back in 2012, around the time Netflix started investing in original shows, Ted Sarandos, who is now the co-CEO of the company, said “the goal is to become HBO faster than HBO can become us.” For Netflix, that meant learning to produce quality original content. For HBO’s owners, it meant they needed to leverage the HBO brand into a full-service “our app could be your life” streaming service full of content from Warner’s extensive library of films plus Discovery’s big pile of basic cable staples.

I watch a lot more HBO Max than Netflix and feel, on a personal level, that their ...