While there are multiple scenarios for WBD’s future, including a whole-company acquisition by PSKY or a structural engineering combination by CMCSA, BofA highlights the unique strategic leverage afforded to Netflix. The report asserts an acquisition by Netflix could potentially be “killing three birds with one stone,” with WBD the latest must-have asset in the competition once known as “the streaming wars.”
The intense interest in WBD stems largely from the scarcity premium commanded by its primary asset: the Warner Bros. Studio. WBD’s intellectual property (IP) library, ranging from Harry Potter to DC Comics to Game of Thrones, makes the studio a “crown jewel” asset, BofA said, with one of—if not the most valuable—content libraries in the world. BofA analysts, led by senior media and entertainment analyst Jessica Reif Ehrlich, estimated the takeout value of the consolidated WBD at approximately $30 per share. (It was trading slightly above $24 at press time.)
Netflix’s reported focus is specifically on WBD’s studio and streaming assets, a deal likely to be valued at more than $70 billion. For Netflix, this would represent a significant pivot from building original franchises to buying established “franchise moats.” While Netflix is the undisputed leader in streaming subscribers, it has historically lagged behind other media companies in deep IP libraries that offer potential use cases for theme parks, gaming, merchandising, and Broadway shows.
Building a franchise like Harry Potter “takes a significant amount of time and investment,” BofA notes, while buying it would provide immediate, low-risk engagement, with significant upside from potential reboots, prequels, or other franchise extensions.
“Warner Bros.’ library offers a depth that Netflix cannot replicate organically within a reasonably short time frame across several pieces of IP,” BofA writes, but more important, it would be a death blow to all of Netflix’s rivals given this IP would complete the Netflix arsenal. “If Netflix acquires Warner Bros., the streaming wars are effectively over,” Ehrlich’s team wrote. Here’s how the birds would fall to the ground if Netflix were to fire its money cannon at WBD.
The first “bird” killed by a Netflix acquisition would be WBD itself, as its streaming and studio assets would vanish, to be housed within the dominant streaming platform.
“Netflix would become the undisputed global powerhouse of Hollywood beyond even its currently loſty position,” according to BofA, with a “content moat” that no stand-alone streamer could touch and combined efforts accounting for more than a fifth of U.S. streaming.
The second and third “birds” relate directly to Netflix’s competitors. The report notes that for midsize legacy media studios/companies, competing with Netflix’s unit economics or the ecosystems of large tech players like Amazon is increasingly difficult. An acquisition of WBD by Netflix would be “existential” for both Paramount Skydance and NBCUniversal (NBCU), effectively solidifying Netflix’s powerful defensive position.
By acquiring WBD’s studio and streaming assets, Netflix would significantly hinder the global scale aspirations of both Paramount+ and Peacock. The BofA team noted Comcast, in particular, is at a “critical juncture” because it is preparing to spin off its declining cable networks into a company known as Versant (a strategy also being pursued by WBD), while it is contending with a streaming platform that both lacks scale domestically and isn’t available outside the U.S.
