What does Netflix really want from Warner Bros? | EXPLAINER

The recent news that Netflix has agreed to acquire part of Warner Bros Discovery (WBD) for USD 83 billion (£61.8 billion), followed by Paramount Global’s hostile counterbid to buy WBD entirely for USD 108.4 billion (£81 billion), has sent shockwaves through Hollywood and the global entertainment industry.

Much of the initial discussion has focused on concerns about job cuts, higher subscription fees, anti-trust implications, and potential negative impacts on the future of filmmaking. Yet one aspect of Netflix’s plan has received less attention: the decision to exclude Discovery’s portfolio of cable channels from the acquisition.

Why did Netflix cut out Discovery’s cable channels?

Netflix’s choice to leave Discovery’s linear TV assets out of the deal reflects its strategy to avoid legacy television infrastructure, including broadcast, cable, and satellite networks. This decision also highlights a broader trend in which traditional TV businesses are becoming less appealing to media companies as audiences shift online. At first glance, this seems to confirm the idea that streaming is replacing traditional television.

Since launching House of Cards in 2013, Netflix has been seen as a disruptor of TV, a tech company challenging the old broadcast model. However, as discussed in Television Goes Back to the Future: Rethinking TV’s Streaming Revolution, this narrative is exaggerated. Streamers have consistently adopted and adapted conventions from legacy television, and the Netflix-WBD deal is no exception.

By acquiring HBO, Netflix would gain one of the very cable TV innovators that inspired its original prestige drama strategy. The company’s announcement celebrating the combination of Netflix “innovation” with Warner Bros’ “century-long legacy of world-class storytelling” reflects this continuity rather than a break from TV history.

How does Warner Bros’ catalogue fit into Netflix’s strategy?

A major motivation for Netflix is WBD’s extensive back catalogue of film and TV content. Channels like TBS, TNT, and in the UK, Gold and Dave, have long built business models around evergreen programming such as sitcoms and police procedurals. Streaming services now use the same approach. Shows like Suits and Lost have become hits again on streaming platforms years after their original runs.

The recent uproar in the UK over Friends leaving Netflix shows just how important such “reruns” are to audiences. Netflix sees WBD’s library, which includes Friends, as a ready-made resource to meet subscriber demand. Amazon’s USD 8.5 billion purchase of MGM in 2022 demonstrates a similar strategy, with the studio’s back catalogue alone valued at USD 3.4 billion.

Is Netflix recreating the cable model?

If the Netflix-WBD deal goes through, it could accelerate what industry experts call “the great rebundling.” The classic American cable model, developed in the 1980s, bundles channels under a single monthly subscription. Streaming initially fragmented this system, leaving viewers juggling multiple subscriptions. Now, platforms are consolidating content and brands, echoing the cable bundle model.

Disney’s integration of Hulu within Disney+ shows this trend. Analysts predict Netflix may adopt a similar strategy with HBO, operating as “a global gateway” for viewers, with HBO as a premium brand within its ecosystem.

Is Netflix truly different from traditional TV?

While Netflix promotes flexibility with on-demand viewing, it has gradually adopted traditional TV practices. Live events such as WWE wrestling, NFL matches, and comedy specials mirror the shared experiences of broadcast TV. Its ad-supported tier, introduced in 2022, borrows directly from commercial television funding models.

Netflix also adapts to national markets rather than offering a uniform global library. Local production offices, regional executives, and culturally specific programming—such as Adolescence in the UK, Money Heist in Spain, and Squid Game in South Korea—mimic the infrastructures of national broadcasting systems.

What does this deal mean for Netflix’s future?

Acquiring WBD would not mark a sudden shift in Netflix’s approach but rather the next logical step in its trajectory. For all its rhetoric about disruption, Netflix has spent the past decade embracing many conventions of network and cable TV. Purchasing Warner Bros would accelerate this process, allowing the streaming giant to further adapt established television models to online platforms.