Trump Warns Netflix-Warner Bros. Deal 'could Be A Problem'

Warner Bros. Discovery

21.96 CHF -1.49%

• Charts
• News
• Analysen

Kaufen Verkaufen

(RTTNews) - While talking about Netflix, Inc.'s $83 billion deal to acquire Warner Bros. Discovery, Inc., US president Donald Trump said the streaming video giant's very big market share could be a problem in culminating the mega deal.

Netflix, which announced the proposed $72 billion equity transaction for the media and entertainment giant last week, is seeking regulatory approval in the US and in Europe. Netflix reportedly has agreed to pay a $5.8 billion break-up fee to Warner Bros. if the deal is blocked by antitrust officials.

Trump, while talking to reporters on Sunday, said he will be involved in the decision about clearing the proposed merger of the two media majors, referring to the regulatory approval the company is seeking.

Trump said, "They have a very big market share and when they have Warner Brothers that share goes up a lot. It could be a problem."

The US President added that Ted Sarandos, co-CEO of Netflix, visited him at the Oval Office for a meeting last week, but did not give him any guarantees about the deal.

It is expected that the combination of Warner's HBO MAX service and Netflix would result in over the 30 percent US market share threshold. Meanwhile, Netflix reportedly would argue to consider other streaming services, including YouTube, when surveying the market share.

It was on last Friday that Netflix announced its agreement to buy the media and entertainment giant, including its film and television studios, HBO Max and HBO, following an auction that included rival offers from Hollywood studio Paramount and media giant Comcast.

The transaction, for a total enterprise value of approximately $82.7 billion or an equity value of $72.0 billion, follows the planned separation of Warner Bros.'s Global Networks division into a new publicly-traded company.

The cash and stock deal is valued at $27.75 per WBD share. The per share price comprises $23.25 in cash and $4.50 in shares of Netflix common stock for each WBD shareholder. The stock component is subject to a collar.

From the deal, Netflix expects to realize at least $2 billion to $3 billion of cost savings per year by the third year and expects the transaction to be accretive to GAAP earnings per share by year two.

The acquisition is expected to close in 12-18 months, after the previously announced separation of Warner Bros.'s Global Networks division, Discovery Global. The planned separation is now expected to be completed in the third quarter of fiscal 2026.

With the planned purchase, Netflix expects to attract and retain more members, and generate incremental revenue and operating income.

In the pre-market activity, Netflix shares were gaining around 1.01 percent to trade at $101.25, while Warner Bros shares were losing 1.9 percent, at $25.58.