Netflix makes an event of another large production cash-and-stock deal with Warners. The all-stock agreement, worth $27.75 per share, will combine Disney with the world’s largest entertainment company. In December, the agreement was announced. As the deal is structured, that puts Warner’s total enterprise value — which includes its current outstanding debt — at $82.7 billion. We don’t know who will get the seats, but Netflix will nominate its own slate of directors as part of the merger process. The date for Warner’s next shareholder meeting hasn’t been set yet.
The merger, as proposed, will need to close in 12 to 18 months from the signing of the agreement. This will allow both companies to grow their content portfolio and enter new geographic markets. Netflix co-CEO Ted Sarandos emphasized the advantages of the merger, stating that it “will deliver broader choice and greater value to audiences worldwide.”
Further, in anticipation of the merger, Netflix and Warner are modifying the transaction to simplify its corporate structure. This amendment increases certainty in value for Warner shareholders. It accelerates the timetable for a shareholder vote, which could take place as early as April.
The merger coincides with a tumultuous time for the entertainment industry, especially not one embroiled in multiple legal fights among the industry itself. A judge recently denied Paramount’s request to expedite its proceedings against Warner, which has been characterized by Warner as “yet another unserious attempt to distract.” This legal backdrop further complicates the negotiations and any subsequent litigation over the merger.
The prevailing political climate may play a role in determining the path forward for the deal. Former President Donald Trump suggested that he would personally intervene in the decisions on mergers. That raises the question of whether politics might be allowed to factor into the approval process. Both Netflix and Warner are feeling the pressure from these outside forces as they continue to approach the finish line on their deal.
David Zaslav, CEO of Warner, expressed enthusiasm regarding the merger, stating it “brings us even closer to combining two of the greatest storytelling companies in the world.” This powerful combination will create rich new content offerings. Further, it will lead to immediate job creation and long-term growth in this emerging industry.
As the merger progresses, stakeholders remain attentive to how these developments will unfold amidst existing legal challenges and political dynamics. As the entertainment industry goes through this period of transformation at lightning speed, this merger creates a key inflection point for Netflix, and for Warner.
