Hollywood is upside down.
What is going on? The rats are trying to find a hole to hide in. We are seeing a race to be the survivor in a world that is changing rapidly.
Warner Bros is on the auction block. Paramount is after it along with Netflix. The latter was the winner yet the Ellisons are launching a hostile takeover.
At this point in time, it is still up in the air where all of this will land. Paramount has an interest in the legacy properties (cable and broadcast channels) whereas Netflix is only concerned about the movie and television library.
All of this said, there is some stunning news coming out of Hollywood. We do not know if it is fluff or not but Netflix considered going after Disney before Warner Bros.
Is this for real? Who knows.
The challenge with speculation of this nature is nobody is sure what is true. Disney has a market cap of $200 billion. This is about double where the present offer for Warner Bros is. Of course, we cannot presume this is the end. The price could go much higher.
Would Netflix pony up double the money for Disney? It is likely they would. As strong as the library is from Warner Bros, it still pales in relation to Disney. Nothing out there is on that level.
The challenge is that Disney does not appear to be for sale. Bob Iger is an acquirer, not a seller. A hostile takeover, much like we are seeing with Paramount, is always possible. To achieve this, however, a premium is required.
What kind of premium does one pay on $200 billion? That would be a chunk of change.
For this reason, I would say there is no way this deal ever goes through.
There is a massive shift taking place.
Elon Musk tweeted last week that AI will end Hollywood. This is a common viewpoint among those in the technology industry.
We saw the legacy media obliterated over the last year. While Netflix is one of the top internet (digital) companies, it is still small when stacked up against the likes of Google and Amazon. Both those entities are heavily invested in the entertainment industry.
This is all happening right as Bob Iger and Disney announced a deal with OpenAI to license the characters to Sora. It really set the industry aflame with many in Hollywood pushing back.
Their efforts will be to no avail.
AI is not at the point where it is a threat to video content creation. That said, in another couple years, things might be different. Elon put a timeline of 3 years on it. Considering that GPT3 only appeared 36 months ago, we can see how much the world can change in that time.
Are these companies bidding on depreciating assets? That is possible. If something like Disney was truly on the block, I would think that an Amazon, Google, or someone with that clout might step in. They dwarf the operations of Netflix and could easily integrate into their platforms.
This might be all amiss. Neither company stepped anywhere near Warner Bros. Why was that? Perhaps their interest in entertainment isn't as strong as some believe. The reality is that they have operations that produce revenues that dwarf what movie studios generate.
Whatever the outcome, we can safely say that consolidation is underway.
