US unions have called for the Netflix and Warner Bros Discovery merger to be blocked.
The US streaming giant Netflix said on Friday that it had agreed to buy Warner Bros Discovery film and TV studios business in a 72 billion US dollar (£54 billion) deal.
Labour unions Writers Guild of America West (WGAW) and Writers Guild of America East (WGAE), which represent writers in film, television, radio and online media, issued a joint statement calling for the deal to be stopped.
They said it would eliminate jobs, push down wages and worsen conditions for entertainment workers, among other things.
The statement said: “The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.
“The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers.
“Industry workers along with the public are already impacted by only a few powerful companies maintaining tight control over what consumers can watch on television, on streaming, and in theatres. This merger must be blocked.”
The deal followed an auction process in which Netflix was the front-runner to buy the business, which owns HBO, streaming service HBO Max and franchises such as Harry Potter and Batman. It had been up against Paramount Skydance and Sky owner Comcast.
The deal could dramatically further reshape the established Hollywood film and TV industry, which has already faced significant upheaval amid the rapid growth of streaming.
Netflix said they expect to maintain Warner Bros’ current operations and will continue to release films in cinemas.
Meanwhile Equity, a performing arts and entertainment trade union in the UK, emphasised the importance of maintaining cinema releases as well as protecting workers’ terms and conditions.
Cathy Sweet, head of TV and film at Equity said: “While company ownership shifts, Equity contracts which underpin the pay, conditions and secondary payments for our members, endure.
“We welcome the commitment to maintaining cinema theatre releases and the commitment to invest in original content, which must be a positive step for jobs and pay for performers and all in the entertainment industry.”
Netflix said it will pay 27.75 dollars (£20.79) per share to investors in the Warner Bros Discovery business.
The deal will close after Warner Bros Discovery completes a proposed spin-off of its cable channels, which include CNN, TBS and TNT Sports in the UK.
As a result, the process is not expected to complete until at least the third quarter of next year.
Nevertheless, the deal is likely to garner significant scrutiny from regulators in the US and Europe.
Ted Sarandos, co-chief executive of Netflix, said: “Our mission has always been to entertain the world.
“By combining Warner Bros’ incredible library of shows and movies, from timeless classics like Casablanca and Citizen Kane to modern favourites like Harry Potter and Friends, with our culture-defining titles like Stranger Things, KPop Demon Hunters and Squid Game, we’ll be able to do that even better.
“Together, we can give audiences more of what they love and help define the next century of storytelling.”
Netflix said the move will provide it with a much deeper library of film and TV content for its subscribers.
It will also enhance its studio capabilities, allowing the company to expand its production capacity and increase investment in original content over the longer term.
David Zaslav, president and chief executive of Warner Bros Discovery, said: “Today’s announcement combines two of the greatest storytelling companies in the world to bring to even more people the entertainment they love to watch the most.”
Netflix shares moved slightly lower after the deal was announced.
Danni Hewson, AJ Bell head of financial analysis, said: “Splashing out so much cash was never going to make the share price jump with delight, but if this deal can clear those significant regulatory hurdles quickly there are likely to be considerable cost savings to be made.
“How much of those savings get passed to streaming platform subscribers or whether Netflix will be seen to have too much pricing power is one of the areas that will face a huge amount of scrutiny in the coming months.”
