Five takeaways from the blockbuster deal

It may seem like a simple merger deal, but it has all the ingredients of a Hollywood drama: a rich and powerful suitor, political machinations, and plenty of enthusiasts.

Netflix’s deal to buy the iconic Warner Brothers Discovery film studio and popular streaming network HBO is a true story of a conquering giant.

But as regulators and competitors continue to wait, this is likely just the beginning of the saga.

As the story unfolds, here are five key things to pay attention to.

Netflix has been riding high in Hollywood for years now, ranking as the largest streaming subscription service in the world and the largest producer of new content in California.

But this deal – the industry’s biggest in years – will confirm its position at the top of the pack, supplying the company with a catalog containing nearly a century of titles and bolstering its already massive production capacity.

Not to mention the massive subscriber count, with Netflix poised to add some of HBO’s 128 million subscribers to its already strong base of over 300 million.

“Netflix is ​​already the largest streaming service, and now if you add HBO Max to it, it’s arguably untouchable,” said Mike Proulx, vice president of research firm Forrester.

The deal will bring together beloved historical franchises like Looney Tunes, Harry Potter and Friends, and HBO hits like Succession, Sex and the City, and Game of Thrones under one roof as do Netflix’s less traditional productions, including Stranger Things and KPop Demon Hunters.

Your purchase also includes TNT Sports outside the US.

Netflix said it hopes to close the deal in the next year to 18 months.

But executives are hesitant about how — or whether — they plan to integrate Warner Brothers and its flagship HBO brand into the existing Netflix service.

Netflix co-CEO Greg Peters said the HBO name is “very strong” and will give the company “a lot of options,” but he did not elaborate further.

Netflix could bundle movies and shows into different packages, though analysts say they’d be surprised to see the HBO brand disappear entirely.

The impact on prices is also unclear.

Netflix’s dominance may allow it to charge customers more. But if viewers find they’re paying for one streaming service instead of two, it could cost them less.

Warner Bros. is one of the studios that defined Hollywood, creating classics like Casablanca and The Exorcist.

But this acquisition is an example of how the golden age of cinema is fading.

Mr. Proulx, of Forrester, said the path is clear, and the future is “all fluid.”

“With this deal it’s official: legacy media ends.”

Netflix has promised to continue releasing films in theaters, which is a somewhat logical decision because it will be acquiring the DC superhero franchise, films that are doing very well in cinemas.

But not everyone believes this will remain a priority for the streamer.

After all, Netflix co-CEO Ted Sarandos said earlier this year that he thought going to the movies was an “outdated concept.” The merger hits a raw nerve in an industry already grappling with earlier job cuts, declining production and the threat of artificial intelligence.

Titanic director James Cameron was one of many in Hollywood who greeted the deal with dismay, warning just before it was announced that he believed it would be a “disaster” for the industry.

Completion of the deal is not at all certain.

First, Warner Brothers Discovery must complete the spin-off of the parts of its business that it does not sell to Netflix, including CNN, Discovery and Eurosport.

Meanwhile, rival Paramount Skydance, which had hoped to buy the entire Warner Brothers Discovery business, may try to convince shareholders that it can offer a better alternative.

However, the bigger question is whether the deal will receive approval from competition regulators in the US and Europe – something that could pose a major challenge.

In Washington, lawmakers from both parties have already vetoed the deal, citing concerns that it would lead to fewer choices for consumers and higher prices.

Sarandos said Netflix, which would have to pay Warner Brothers $5.8 billion if the deal collapsed, was “very confident” it would be approved.

It will partly depend on how regulators define the competitive landscape, said Jonathan Barnett, a professor at the University of Southern California Gould School of Law.

If regulators only look at streaming video, Netflix’s increasing market share could raise big red flags. But if regulators adopt a broader definition, one that includes cable TV, streaming TV and even YouTube as competitors to Netflix, “the concentration concerns become less and less,” he said.

A merger like this is usually “an obvious case of defiance,” and typically pushes for better terms for consumers, said Rebecca Howe Allensworth, a professor at Vanderbilt Law School.

This time, she’s concerned that the Trump administration might put pressure on Netflix over issues like diversity and political bias, as has happened in other cases.

Debate looms over whether President Donald Trump will intervene.

This administration has promised a lighter regulatory touch when it comes to mergers.

But the president praised Paramount Skydance’s owners, tech billionaire and Republican donor Larry Ellison and his son David, who are behind the rival bid for Warner Bros. Trump has always shown a keen interest in the media and entertainment industry.

There was no comment from US competition regulators, but a senior Trump administration official told CNBC that the administration views Netflix’s bid for Warner Bros “with extreme skepticism.”