The Fight for Warner Brothers and What it Means for Canada

Warner Bros has gone through so many mergers, acquisition and ups and downs that it is difficult to even keep up with nowadays. It is important to note that the legacy Hollywood studio did start off with four brothers. The name Warner Brothers is the anglicized version of their name from the old country. The youngest of the brothers Jack was born in London, Ontario but was raised in the States. The first film production began in New York in 1910 but by 1917 they began to do work out of Los Angeles.

The patents of Thomas Edison were ended in 1915 by the U.S. courts in an anti-trust case that took the handcuffs off the movie industry. Warner Brothers was the most junior of these new film companies and only took off with the story of a Canadian dog called Rin Tin Tin. But this isn't the history of one of the leading companies in film and television. It is about the future.

Warner Brothers has been constantly been bought and sold by big players. Most recently AT&T sold the company off and it merged with Discovery to form Warner Bros. Discovery. And now this massive company is in play as Paramount and Netflix fight over it. This has caused widespread panic in Hollywood because Netflix is not a company that produces movies for exhibition as part of its business model. The other suitor Paramount looks like it is very close to the Trump administration and his family and might take the company in a conservative direction. All of the TV and film industry is worried by fewer buyers and distributors of content in the world market. Every one of the mergers is marked by cutbacks.

Warner Bros. Discovery is massive but lately top execs have been treating all non-digital assets as trash and splitting them off from the company. They call the split off part Shitco. That would be the cable assets and the legacy TV channels. Streaming is where the growth is. The big money people hate those assets and yet those assets continue to generate huge cash.

Warner has shot a lot of movies over the years in Canada. It and Deadpool among many have filmed in Canada. Winnipeg has not seen too many. Universal, Netflix and Hallmark are more frequent American studios who film in the city. If Warner gets bought up, do they simply become an inhouse library for either Paramount or Netflix. Do we see massive cuts, shifts in production? Do they simply go all AI?

Warner has gone from one crappy deal to another from AOL to AT&T. It is so bad they call it the "'Warner Bros Curse." Corporate civil war at all times, terrible debt and mismanagement. Buying any studio seems a recipe for debt and heartache. It can work if your corporate structure is set up to support your other businesses. In the case of Sony, was hardware and software coming together where it made sense for it. 

Too often studio purchases are ego trips with terrible debt. And if accountants get too involved, the creativity part that makes the business work gets drowned in a numbers game. While it is nice to have franchises, it can turn on a studio and lose a massive amount of money if the magic is gone.

If Warner does get swept up in Netflix or Paramount, it may hurt supply chains across the world. For example, Warner Bros. produces content for other television networks and partnerships. Netflix tends to keep things in-house and vertically integrated. A Warner merger with Netflix might make a company so powerful that that United States and Europe might order it broken up or not approved at all.

In Canada, it could mean a sold Warner Bros. might equal fewer buyers and distributors of Canadian content. It may hurt Crave TV which uses HBO content. It could hurt cable which uses Discovery content. It just doesn't seem to pass anti-trust laws in any country. Even Donald Trump seems to get that although he couldn't care less about Canada and the world. However, he does know that Netflix would be so powerful that it could be a threat to him. At least Trump's family member has stepped aside from the bid. It might be he saw the potential legal problems or the price was just going to be too high.

The loss of Warner Bros is not the same as Amazon buying MGM. While concerning, MGM was just not the huge player Warner is. Nor did it have news and sports divisions like Warner does. The Paramount deal might have Saudi Arabia and interests owning CNN as part of Warner. The Netflix deal might have CNN stop broadcasting on cable and move to Netflix. All theatres might lose product. It is safe to say that the deal will not close as quickly as any of the parties want and that by 2026, electoral changes could mean a deal is rejected.

Not every deal goes through in business. In Canada, the big five banks wants to merge down to three. The Liberal government of the day said no. The banks survived. It would have not served any Canadian had we gone down to three. One wonders if the government had said no to the Sobeys takeover of Safeway in 2013. The Conservative government of the day let it happen and it did none of Canada good. The lack of competition of food prices is partly to blame for that decision.

Does Canada have a say in it? Possibly. But every time we try to regulate online, the more the U.S. complains. In this case though, it is American interests themselves that fear the Warner Bros. takeover by Paramount or Netflix. The market is also dubious with Netflix stock down. This should be of concern. Disney's takeover of 20th Century Fox is still a drag on their stock price. Because of the world implications on this deal, the Europeans could reject some or all of it. Canada is just thought to be part of the American market so no consideration will be made even if it hurts the theatres, cable industry and our streaming business.

It s unclear what politics might be in play. If Paramount gets the deal, does the company become ultra right wing? If Netflix gets the deal, do become political? It is an overall mess. And may go on long into 2026.