EMERGENCY EPISODE: Netflix Buys Warner Bros. – What It Means for Licensing

EMERGENCY EPISODE: Netflix has just won the bidding war to acquire Warner Bros. Discovery's streaming platforms and legendary IP portfolio in an $82.7 billion deal - but what does this mean for the licensing industry?

In this urgent episode, host David Born breaks down the deal that's sending shockwaves through Hollywood and explains why no one is talking about the biggest question for the licensing industry: What happens to billion-dollar evergreen brands like Looney Tunes, Scooby-Doo, and DC Super Heroes when they're handed to a company with less experience managing year-round licensing programs?

David opens with a story from his time at Warner Bros. that perfectly captures why licensing is always the "little monkey on the big gorilla's back" - an afterthought in major entertainment decisions. He then walks through:

• How we got here: The timeline from Skydance's Paramount acquisition to Netflix's winning $82.7B bid
• The three scenarios: Why Netflix is the best option compared to Paramount or NBCUniversal (and why it's still risky)
• What's at stake: The massive Warner Bros. portfolio - from Harry Potter to Friends to The Flintstones
• Netflix's track record: Why they're brilliant at tentpole licensing (Stranger Things, KPop Demon Hunters) but untested with evergreens
• The consolidation concern: Job losses, reduced resources, and what it means for our industry
• The big questions: Theatrical releases, retailer impact, and whether Skydance will disrupt the deal

This is a 12-18 month regulatory process, and anything can happen. But one thing's certain: the licensing landscape is about to change in a massive way.

Full disclosure: David's business works with several companies discussed in this episode. All information shared is based on public knowledge and personal analysis - no confidential information is disclosed.

Don't miss Monday's holiday wrap-up episode featuring the Born to License team!

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Transcript

I want to start this emergency episode with a story from my time at Warner Bros., because I think it perfectly sets the context for what I'm about to talk about today. One day, my boss pulled our entire licensing team into a conference room. He put up a picture on the screen. It was an image of a big gorilla with a tiny monkey sitting on its back. He pointed to the monkey and said, that's us. That's the licensing team. But this gorilla, this gorilla is the rest of the business. This is box office revenue. This is cable subscriptions. It's everything else. We are the little monkey on the big gorillas back. And that image has stuck with me for years because it's really the reality of licensing in the entertainment industry. Now, things have changed since I was at Warner Bros. fifteen years ago. Box office has become a smaller part of the revenue pie. Cable has become much, much smaller. Streaming has become the dominant force. But licensing licensing is still that little monkey. And yesterday, when Netflix and Warner Bros. announced one of the biggest deals in entertainment history, it's very unlikely that anyone thought about the implications from a licensing industry perspective. They weren't thinking about retailers having fewer major licensors to partner with, or the licensees that were going to have fewer options. And they certainly weren't thinking about those properties that are going to be forgotten. They were thinking about content libraries, subscriber growth, market dominance, licensing. Well, that's an afterthought. And that's what I want to talk to you about today, because yesterday's announcement is going to have a massive ripple effect on our industry. And I don't think anyone's really talking about it. This is an emergency episode of Born to License. Yesterday, Netflix emerged as the winning bidder to acquire Warner Bros. Discovery's streaming assets and IP portfolio in a deal valued at eighty two point seven billion dollars. That includes the debt they're taking on as well. When I say this is seismic, I mean it could reshape the entire licensing landscape as we know it. Here's the thing, though. Everyone's talking about what this means for Hollywood, for streaming wars, for financial markets, but no one's talking about what this means for licensing. And that's exactly what we're going to do today. Before I dive in, I need to give you full disclosure. One or more divisions of my business works with the key players I'm going to be talking about today Netflix, Warner Bros. Discovery, Paramount, NBC universal. What I'm sharing is based on my opinion and on public knowledge. I've signed non-disclosure agreements with these companies, and I'm not going to share any confidential information that I may have heard at summits or meetings. Everything I'm talking about today is public information combined with my analysis. As someone who's been in licensing for almost twenty years. All right. So let's start with how we got here. So here's how all this unfolded. Earlier this year, Skydance, led by David Ellison, completed its acquisition of Paramount. Eight billion dollars a big deal. Lots of buzz in the industry. And almost immediately, Skydance started looking at their next target, Warner Bros. Discovery. When Skydance announced their interest, it triggered a bidding war. Suddenly, you had three major players circling number one Skydance, Paramount wanting to create this mega studio, combining their newly acquired Paramount assets with Warner Bros. number two, Comcast, NBC universal looking to consolidate even further. And number three, Netflix, the Dark Horse that quite honestly, I don't think anyone saw as a serious bidder. And yesterday, Netflix won. The deal is valued at eighty two point seven billion dollars in total enterprise value, which includes Warner Bros. Discovery's debt. Here's the critical detail. Netflix is only buying the streaming platforms and the film and television studios, including the IP. They are not buying the linear television networks. They're not buying CNN, they're not buying TNT, they're not buying Discovery's cable channels. Those will be sold off separately to the highest bidder. Netflix wants the fun part. They want the content and the IP that they can leverage. Now I need to emphasize this. This is not a done deal. We're looking at a twelve to eighteen month regulatory approval process that's not just in the United States. This has to go through the E.U. it has to go through other regulatory bodies in other markets around the world, too. And there are significant breakup fees. If Netflix walks away from the deal, they have to pay Warner Bros. five point eight billion dollars. And if Warner Bros. walks out of the deal to pursue another merger, they have to pay Netflix two point eight billion dollars. And here's where it gets interesting. Skydance, from what has been reported, are very unhappy about what's happened. They have made multiple bids. Paramount actually sent a letter to Warner Bros. Discovery's management team raising concerns about the fairness and adequacy of the sale process, claiming that Warner Bros. Seemed to favor Netflix from the beginning, so this could get really messy. But as it stands right now, Netflix is the winning bidder. Now let's talk about what this means for licensing because of the three possible buyers Skydance, NBC universal, Netflix. I actually think Netflix is the best case scenario for the licensing industry, and I say that with some serious reservations, which I'm going to get to. But first, let me explain why I think Netflix is better than the alternatives. We've seen this before. We've seen what happens when a major licensing player gets absorbed by a bigger company. And the best example is Disney's acquisition of Fox. In twenty nineteen, Disney paid seventy one billion dollars for twenty first Century Fox. And what happened to Fox's licensing portfolio? It mostly got buried. Let me give you some examples. The Simpsons, one of the biggest licensing properties of the nineteen nineties and two thousand, you could find Simpsons products everywhere today, much less presents. Ice age plush toys were everywhere. That franchise was massive in licensing today. Well, it's been very quiet. There will be a new film releasing in February twenty twenty seven, so it does look like Disney is going to be giving that franchise some love. Finally. But what about Rio? Futurama, family Guy, Bob's Burgers all these properties had licensing potential or actual programs today. They're essentially deprioritized from a consumer products perspective. Why did this happen? Because Disney is a franchise first company. They have limited resources and they prioritize their franchise pillars Disney Classics, Pixar, Marvel, Star Wars, for example. Fox properties had to fight for attention and they just couldn't compete. Now let's apply that logic to this deal. If Skydance Paramount had one, they'd be juggling an enormous portfolio. Paramount alone has SpongeBob, which is absolutely massive in consumer products. South Park Teenage Mutant Ninja Turtles, Star Trek. Paw Patrol They have TV properties like Yellowstone and film properties like Top Gun. Now add all of Warner Bros. On top of that, properties are going to get Deprioritized. Same with NBC universal. They've got Dreamworks. So Shrek, trolls, Puss in Boots, Madagascar, they've got illumination. So minions, Despicable Me, they've got wicked, which was a massive licensing play this year, and last year they have the monster portfolio, not to mention major film franchises like Fast and Furious, jaws, Jurassic Park. If you add Warner Bros., some properties will no doubt end up on the bench. But Netflix. Netflix has a much smaller owned IP portfolio. Stranger Things, Squid Game, Bridgerton They don't manage the licensing for some of the biggest hits, like Wednesday, who sits with Amazon, MGM and Emily in Paris, who sits with Paramount. They recently acquired the Roald Dahl Story Company, which gave them some rich evergreen properties to manage. But compared to the other two potential buyers, Netflix has capacity they have room to take on more. They're not drowning in franchises competing for attention. That's why this, in my opinion, is the best case scenario when considering the three companies who threw their hats into the ring. That's if Netflix can rise to the challenge. Let's pause for a moment and appreciate what Netflix is about to take on. Warner Bros. has one of the most valuable and diverse IP portfolios in entertainment. We're talking about Harry Potter and the entire Wizarding World film franchises like Lord of the rings, The Matrix, The Wizard of Oz, Casablanca, the entire DC universe, Superman, Batman, Wonder Woman, Aquaman, The Flash. They have an extensive animation portfolio Looney tunes, Scooby-Doo, Tom and Jerry, Powerpuff Girls, Rick and Morty, Hanna-Barbera properties, The Flintstones, The Jetsons, Yogi Bear, top Cat, HBO properties, game of Thrones, House of Dragon, The White Lotus, succession, The Last of Us, The Sopranos. They have sitcoms like friends, Huge in Licensing, The Big Bang Theory, two and a Half Men, not to mention The Conjuring Universe, the Dune universe, amongst many others. These aren't just properties, these are billion dollar brands. Looney tunes has generated decades of licensing revenue. DC superheroes the Superman shield, the shield, the Batman symbol. These don't need new movies to sell. Walk into any H&M, Primark, Walmart and you'll find DC superhero apparel all year round. These are evergreen brands and that's my biggest concern. Here's what Netflix does brilliantly. Tentpole licensing. Stranger Things season five has recently launched and it is everywhere. I just got back from six weeks of travel in Australia, UK, US and Brazil and in every market. I saw Stranger Things product, apparel, toys, collectibles, food, partnerships. You cannot miss it. I posted about this on both my LinkedIn and my Instagram last week. Netflix has nailed it. Years of planning, getting licensees and retailers on board early. Executing at scale. Squid game same thing. Massive pop culture moment. Huge consumer products program. K-pop demon hunters. Now that was a surprise hit for Netflix. They underestimated it initially. Couldn't convince toy licensees or retailers to get behind it. Then it became the biggest Netflix hit ever over three hundred and twenty five million views, making it the most watched Netflix film of all time. When things really blew up for K-pop demon Hunters, there was press about how there were limited toys available when the show exploded. But Netflix learned they did theatrical sing along events that topped the box office. The soundtrack had four songs simultaneously in the Billboard Hot one hundred top ten, a first for any film soundtrack. So Netflix knows how to do event driven licensing. They're probably the best in the business at capturing big pop culture moments. But here's my concern Netflix has little track record managing evergreen brands. Looney tunes is an all year round brand without massive tentpole moments. Scooby-Doo doesn't need a new movie to sell lunchboxes. DC superheroes. People buy Superman t shirts all year round, whether there's a film or not. Netflix uses licensing as a marketing tool to drive subscriptions. Product launches when there's new content, when there's no new content, licensing mostly goes quiet. That model works for tentpole properties, but it does not work for evergreens and Warner Bros. Is built on evergreens. I'm asking, can Netflix adapt? I genuinely don't know. I hope so, but this is a massive question that our industry needs to ask. Let's talk about the operational reality. Netflix is already saying they expect to have two to three billion dollars annually through what they're calling, quote unquote, cost synergies. We all know what that means. That means layoffs. Right now, both Netflix and Warner Bros. have licensing teams. Warner Bros. Consumer products division is substantial and has a global footprint through in-house teams and licensing agents. They have the systems, processes, relationships to manage a massive portfolio. If you combine these companies, there will be consolidation, a lot of roles will be doubled up and people are going to lose their jobs. Experience professionals are going to be let go in the name of synergy. Here's what frustrates me. I don't think anyone from the licensing team should go. In fact, they should probably hire more people. Warner Bros., although they might not admit it, already struggles to give adequate attention to their portfolio. Now Netflix is taking it on, plus their own growing slate. They need more resources, not fewer. But that's not how corporate consolidation works. The goal is cost cutting, even if that means the portfolio suffers. And this isn't unique to this deal. Our industry is going through massive consolidation. The shift from retail to e-commerce, for example, over the last five to ten years has forced strategy changes. We've seen mergers, acquisitions, layoffs. I get contacted two or three times a week by amazingly talented people looking for work, people with twenty years of experience who've built incredible careers. They're struggling to find roles because opportunities have shrunk. This is heartbreaking. And now we're adding another major consolidation. I'm genuinely worried about what this means long term for the people of our industry, for the diversity of licensors and for the overall health of the licensing ecosystem. There's another dimension here that impacts licensing, even though it's not directly about it. Netflix has historically been anti-theatrical. Their business model is about watching content at home. Warner Bros. has always been a theatrical first studio. Getting people into cinemas has been core to their identity. Netflix has said they'll maintain Warner Bros. current operations, including theatrical releases for films. But how long will that last? There have been recent exceptions. Greta Gerwig, who's directing the upcoming Narnia films for Netflix, insisted on a theatrical release. She negotiated a two week exclusive run in Imax theaters worldwide in about one thousand locations across ninety countries. The film will release Thanksgiving in twenty twenty six. In Imax, then debuts on Netflix Christmas twenty twenty six. But Ted Sarandos has been clear this doesn't represent a change to Netflix's theatrical strategy. He called it a release tactic, quote unquote, and a two week special event as part of the Warner Bros. Deal, Netflix is honoring existing theatrical commitments for films in production, but in the long term, five years from now, I'd be surprised if Warner Bros. Films are still getting theatrical releases, and that matters for licensing, because theatrical releases are a huge drivers of consumer products programs. They create awareness, excitement, clear tentpole moments. If films stop going to theaters, the licensing playbook will change significantly. So what happens next if this deal goes through? Here are the big questions I'm asking. One. How will Netflix handle evergreen brands? Will they invest in year round retail strategies, or will Looney Tunes and Scooby-Doo fade? Because Netflix doesn't know how to manage properties without tentpole moments? Two what happens to theatrical releases long term? Three what does this mean for licensees and retailers? Fewer major licensors means less competition and potentially fewer options for will Skydance disrupt this? They're reportedly furious. Could they cannot offer or derail the whole deal? Five what does Netflix actually do with Harry Potter? DC comics, Lord of the rings, friends, Looney Tunes. Will they create new content? and how will that impact licensing? This is, as I said, a twelve to eighteen month regulatory process. A lot can change and probably will change. Regulators could block it, other bidders could emerge. But the licensing landscape is about to shift dramatically. I worked at Warner Bros. for four years earlier in my career. A lot of my foundational learning came from that time I worked on Scooby-Doo, Looney Tunes, DC Super Heroes, and I have deep appreciation for these brands. I remember Scooby-Doo being the number one brand across my food and beverage portfolio. The generational awareness of the brand made it perfect for lunchbox products. The kids love Scooby-Doo, but importantly, the main grocery buyer, mom and dad love and trust Scooby-Doo, too. I could say the same thing about Looney Tunes DC Super Heroes. These characters have been popular for decades and decades. I remember when I was young having Looney Tunes tazos I got in those chip packets and I was obsessed with them. I looked them up recently online and I thought, oh, I had that one, I had that one. I must have had all of them. And the designs gave me so much nostalgia. So this isn't just business for me. It's personal. I really care about these properties. I'm watching this deal closely, not just as a licensing professional, but as someone who genuinely cares about these brands. I really hope Netflix rises to the challenge. I hope they invest in the resources, the people and the strategies these brands deserve because if they don't, we could see some of the most iconic IP in entertainment history fade into the background. And that would be a tragedy. All right, now, before I wrap up, just a couple of reminders. This deal is not done. Twelve to eighteen months of regulatory review is a long time. Things can change. And if they do, I'll certainly be sharing my views once again on Monday. We've got the Born to license end of year holiday wrap up episode. It's the last episode of the year, and honestly, it's probably my favorite episode of twenty twenty five. I'm bringing on my whole born team You'll hear from incredibly talented people across our divisions. We'll talk about the year it was, share insights, predictions, behind the scenes stories and you'll get to know the Born team better and I think you'll really enjoy it. Make sure to tune in on Monday then I'll be back in twenty twenty six. We've got great guests lined up, deep dives planned, and of course we'll follow this Netflix Warner Bros. Story as it develops. If you're not already following me on Instagram, I'd love to connect. Its David Born with a zero instead of an oh, and while you're at it, come find me on LinkedIn too, where I share a lot of my views. And of course, if you have thoughts on this deal, I want to hear from you. Are you excited? Are you worried? Are you a licensee or retailer wondering what this means? Send me a DM. This is a huge moment for our industry. The more we discuss it openly, the better prepared we'll be. All right. That's it for this episode. Have a great weekend. This is David Born, and thanks for listening to Born to License.