Netflix's billion dollar plan to buy Warner Bros could be bad news for Sky TV

Netflix's $125-billion (US$72b) plan to buy Warner Bros could have adverse implications for New Zealand's Sky Television as well as the price of Netflix subscriptions.

Brokerage firm Forsyth Barr analyst Ben Crozier said the deal, announced Friday, could have a negative affect on Sky's annual revenue, particularly from Neon subscriptions.

"SKT is the exclusive distributor of Warner Bros. and HBO content in New Zealand, with SKT's Neon platform particularly reliant on HBO content," Crozier said, adding Neon's current top 10 content was from HBO," Crozier said.

"Netflix's acquisition may be a potential catalyst for HBO to accelerate its global direct-to-consumers reach, including to New Zealand."

He said the change would not mean the end for Neon.

"There are a lot of other entertainment studios out there that Sky TV can find rights with to distribute through the Neon platform.

"The longer-term success of Neon in particular, will come down to SKT's ability to either renew its Warner Bros. deal, or source non-Warner Bros. entertainment content."

The deal would place the streaming giant's HBO brands under the Netflix umbrella as well as control of Warner Bros.' television and film, studio assets and content library.

While Netflix was positioning the takeover as a done-deal, there were other potential bidders and the deal would still need regulatory approvals, which could take 12-to-18 months.

Warner Bros. would also need to split off its other assets, which were not part of the deal, including global cable television networks, such as CNN, which will be spun off into a separate company.

"We estimate SKT will generate about $45m in revenue from Neon subscriptions in FY26," Crozier said, in addition to other undisclosed revenue lines.

"We see this as the most likely impacted revenue stream."

However, he said Sky Box entertainment subscriptions could also be adversely impacted, while advertising revenue was expected to be less affected.

He said potential for HBO to bypass Sky TV and go direct-to-consumers in NZ was not a new risk for Sky, though it was not certain when or whether it would be an outcome of the Netflix deal.

"It's a bit of a negative hit, but it's been the risk there for a while, and these legacy assets are like that.

"Given SKT's existing deal and acquisition timing the impact to FY26 for SKT is likely to be minimal, but FY27 and beyond have become slightly more uncertain."

Netflix subscriptions could rise

Tech commentator Paul Spain told RNZ's Morning Report said the deal was likely to push up the price of Netflix's subscription.

"When you've got one big player that has a lot of control over the market, then they can really pick the prices that they want to sell at, and they can somewhat justify that, with an increased catalogue of content."

Spain said there was also a concern Netflix would have too much control over the movie industry.

The Netflix deal had potential to reshape the global entertainment business, as Warner Bros. was one of the most prized and oldest Hollywood assets, established in 1923.

Sky TV has been asked for comment.

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