The $72 Billion Netflix Deal Now Needs the Trump Administration’s Blessing

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So the AI that's designed to make everyone's job easier to manage actually creates more to manage for everyone in IT? Funny how that works. IBM helps smarter businesses scale and manage their AI. Let's create smarter business, IBM.

Pierre Bienaimé (0:19)

Netflix is buying Warner Bros for $72 billion in a huge Hollywood deal, but is a huge fight next. Plus, a CDC panel remade by RFK Jr. votes to drop long-time Hepatitis B recommendations for newborns.

Sabrina Siddiqui (0:34)

Kennedy pushed out all the previous members who were long-time public health and infectious disease experts. So you had people who were presenting on the Hepatitis B vaccine, who are long-time anti-vaccine activists.

Pierre Bienaimé (0:51)

And Western buyers line up for Israel's latest military technology. It's Friday, December 5th. I'm Pierre Bienaimé for The Wall Street Journal, filling in for Alex Osala. This is the PM edition of What's News, the top headlines and business stories that moved the world today.

First up, we have an update on that Netflix deal we mentioned on this morning's show. The streaming giant has agreed to buy Warner Bros. Discovery Studios and HBO Max streaming service for $72 billion, beating out Paramount and Comcast. On an investor call this morning, Netflix's co-chief executive Ted Sarandos acknowledged that some were surprised by the deal, the company's largest acquisition ever.

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This is a rare opportunity. It's going to help us achieve our mission to entertain the world and to bring people together through great stories.

Pierre Bienaimé (1:40)

Wall Street Journal entertainment reporter Joe Flint says the deal would change Netflix across the board and could shake up the theater industry.

Joe Flint (1:48)

Going forward, when Netflix is really calling the shots there, how committed will they be to the traditional theatrical release? We know the company doesn't love it. So certainly it is safe to say that if Netflix does continue with the theatrical model for Warner Bros, they are going to really try to shorten those windows between how long a movie is in the theaters and when it can be elsewhere.

Pierre Bienaimé (2:11)

And after the dramatic auction process for Warner, there may still be more drama to come. People familiar with the matter say Paramount, which also made a bid, is now weighing its next move. And Joe Flint says antitrust scrutiny is going to be significant. A senior Trump administration official said today that the president's advisors are concerned about the Netflix deal. And Netflix has agreed to pay Warner what's called a breakup fee of $5.8 billion if the deal falls through because the companies don't get the approvals they need.

Joe Flint (2:39)

To hear Netflix and Warner talk about it, this deal is going to sail right through. But to talk to Paramount, which of course lost out, and to various antitrust lawyers and even a few former regulators I've chatted with, this deal is going to face a lot of challenges. The real question for Netflix will be how the Department of Justice views the streaming landscape and competition. Netflix would tell you they compete with everyone. YouTube, Facebook, Instagram, Fortnite, sleep. Anything that can keep you away from a Netflix screen is a competitor to them.

But DOJ experts don't see it as broadly as that. That's where Netflix could face some challenges because combined with HBO, they would have over 30% of the subscription streaming marketplace in the US. And that's kind of a trigger point when you hit that 30% mark that borders into prove you're not doing something wrong material. We're seeing people on both sides of the aisle politically weigh in against this deal. Elizabeth Warren this morning put out a statement. There's been statements from some Republican senators as well. So it's going to be a fight.

Pierre Bienaimé (3:47)

That was WSJ reporter Joe Flint. We exclusively report that Elon Musk's SpaceX is kicking off a secondary stock sale that would value the rocket maker at $800 billion, surpassing OpenAI to make it the most valuable US private company ahead of a potential IPO next year. That's according to people familiar with the matter. There's no guarantee SpaceX will reach the $800 billion value it's aiming for. The secondary share sale allows employees and investors to cash out their existing shares in a company that is nearly 25 years old and hasn't yet gone public. People familiar with the matter say SpaceX executives are weighing a potential initial public offering in 2026 The company's investors have been waiting for an IPO for years as SpaceX has grown into an essential service for the US government, launching satellites and astronauts, as well as a global internet provider. SpaceX didn't immediately respond to a request for comment. In Washington, regulators have rolled back rules put in place after the 2008 financial crisis that limited the risk banks could take in corporate lending. Those restrictions fueled the boom in lending by big private investment funds, which stepped into the gap to make riskier loans for companies like private equity targets as well as unprofitable tech startups. Today, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency said the 2013 guidance on banks was overly restrictive.