The $108 billion Warner Bros and Netflix deal has sparked backlash — here's why

A major deal between Netflix and Warner Bros has sent shock waves through Hollywood and sparked backlash.

The $108.5 billion merger means the streaming giant will add shows and movies such as Game of Thrones, titles from the DC Universe, Dune and Harry Potter to its portfolio.

In response, Hollywood's elite have launched an aggressive campaign against the acquisition, with major director James Cameron calling the buyout a "disaster".

Here's why.

What is the Netflix and Warner Bros deal?

Netflix has confirmed it will acquire Warner Bros Discovery's (WBD) film and television studios and streaming service HBO Max for an equity value of around $108.5 billion.

The agreement came after a weeks-long bidding war between Netflix and Paramount.

After downplaying speculation about buying a major Hollywood film this year, the streaming pioneer threw its hat in the ring when WBD kicked off an auction for the company on October 21 after rejecting several unsolicited offers from Paramount Skydance.

In June, WBD announced plans to split into two publicly traded companies, separating its cable television networks from Warner Bros Studios, HBO and the HBO Max streaming service.

What does the deal mean?

Netflix has been a powerful force in Hollywood for years, ranking as the world's biggest streaming service and the largest producer of new content in California.

But this deal would make it even stronger, providing a powerful catalogue of titles and bolstering its production capacity.

In addition, Netflix would also take over millions of HBO Max subscribers.

Netflix has promised to continue theatrical releases for Warner Bros studio projects already slated for release.

What does the deal mean for Australian audiences?

It is not yet clear what will change and how soon that might be for Netflix's estimated 6.4 million Australian subscribers.

Netflix sent an email to Australian subscribers this weekend that said nothing was "changing today" and that both HBO Max and Netflix would continue to operate separately for now.

"We have more steps to complete before this deal is closed, including regulatory and shareholder approvals," the email read.

"You'll hear from us when we have more to share."

Warner Bros' HBO Max was the latest streaming service introduced to Australia this year.

Binge used to market itself as the Australian streamer for HBO shows like The White Lotus, Sex and the City and The Last of Us, but those titles were removed when HBO Max entered the Australian market.

It is unclear how the absorption of HBO's titles into Netflix will affect pricing.

Why is the merger controversial?

Netflix made its mark as an industry disruptor and has been reluctant to release its original content into theatres.

Titanic director James Cameron called the buyout a "disaster," while a group of prominent producers lobbied US Congress to oppose the deal, according to trade magazine Variety.

In a letter to lawmakers, an anonymous group of filmmakers warned that Netflix would "effectively hold a noose around the theatrical marketplace", further damaging a Hollywood ecosystem already strained by audiences' shift from theatres and TV to streaming.

According to Variety, the group said it was remaining anonymous "not out of cowardice" but fear of retaliation due to Netflix's power as a buyer and distributor.

"I could not think of a more effective way to reduce competition in Hollywood than selling WBD to Netflix," Warner's former CEO Jason Kilar wrote on X.

Ahead of the decision, in an opinion piece published on The Ankler website, actress Jane Fonda wrote the WDB Deal put "Hollywood and democracy at risk".

"Regardless of which company ends up acquiring Warner Bros, discovery or its parts, the resulting impact is clear: Consolidation at this scale would be catastrophic for an industry built on free expression, for the creative workers who power it, and for consumers who depend on a free, independent media ecosystem to understand the world," she wrote.

"It will mean fewer jobs, fewer opportunities to sell work, fewer creative risks, fewer news sources and far less diversity in the stories Americans get to hear."

At the centre of Hollywood's ire is Netflix co-CEO Ted Sarandos, who has declared that the era of movie-goers flocking to theatres is over.

During an analyst call on Friday, Sarandos acknowledged surprise over the acquisition but pledged to maintain Warner Bros' theatrical releases and preserve the HBO Max brand.

Michael O'Leary, CEO of Cinema United, the world's largest exhibition trade association, warned: "Netflix's success is television, not movies on the big screen. Theatres will close, communities will suffer, jobs will be lost."

Beyond Hollywood, the backlash has been felt in the share market and in Washington.

Netflix's shares plummeted more than three per cent following the announcement.

Even some Democrats and Republicans agreed that the deal was concerning.

US Democratic Senator Elizabeth Warren said the deal "could force you into higher prices, fewer choices over what and how you watch and may even put American workers at risk".

Republican Senator Mike Lee said the acquisition "should send alarms to antitrust enforcers around the world".

The letter by the anonymous group of Hollywood producers urged politicians to speak publicly against the acquisition, Variety reported.

What happens next?

The deal is not officially done as it first needs regulatory and shareholder approval.

According to Netflix, the transaction is expected to close after the previously announced separation of Warner Bros' global networks division, Discovery Global, into a new publicly-traded company, which is now expected to be completed in Q3, 2026.