Warner Bros. Discovery in Standoff with Netflix over Licensing Payments; How Could This Impact Distribution Relationship?
Licensing content to other media entities is a fairly common practice for TV studios. It gives them a way to earn money for shows that they make without having to take on as much risk on the distribution side of the equation. But licensing agreements can be tricky, and if one side becomes unhappy, it has the potential to cause large ripple effects for both companies involved.
Such may be the case for Netflix and Warner Bros. Discovery. Reporting from Deadline states that WBD CEO David Zaslav is upset with the world’s largest streamer because of the way it structures its payments to producers. Netflix pays its content creators over a course of 18 to 24 months, a policy it adopted in 2021, so there is nothing new in this arrangement.
Zaslav took charge of WBD in April when WarnerMedia was acquired by Discovery, so Netflix’s payment policies have not changed since he took over. Even other WBD employees are a bit puzzled by the timing of Zaslav’s newfound anger with Netflix.
“It’s an odd way of looking at it,” one Warner Bros. Discovery insider told Deadline. “It’s obviously the way the industry works and has worked with Netflix. He’s paid big numbers [by Netflix] and the company has been happy with that. It’s like he suddenly discovered what the payment terms were.”
One possible explanation for Zaslav’s sudden rancor lies in his strategy of monetizing all facets of WBD to the last possible dollar. Zaslav has not only been slashing content from WBD’s premium streaming service HBO Max, he has also been making moves to boost revenues, such as licensing DC characters to Amazon so that company can produce animated superhero shows for Prime Video.
If WBD wants to become an even bigger content arms dealer, Zaslav’s public frustration with Netflix could be a way to manufacture leverage for future distribution deals. Warner Television, the division of the company responsible for making TV shows that will be shown on other networks or services, could start demanding the entire payment for licensed shows up front in future deals.
What is immediately clear is that Zaslav is willing to use more than words to get his point across. He has reportedly instructed his teams to pause selling Netflix finished shows for a few weeks. This will not affect shows like “The Sandman,” which the two companies already have a contract for, but it does mean that new shows may get licensed to other media outlets who are more willing to meet WBD’s demands while it sorts out its deal with Netflix.
Ultimately, this dispute will probably be solved with a new contract between the two companies. However, with Zaslav’s reputation as a man willing to do whatever he thinks is best for WBD, it could escalate all the way to WBD pulling shows off Netflix. That would be a drastic step, but by doing so WBD could send a message to Netflix and the rest of the entertainment industry that it will not wait to get paid by licensors of its content.
Netflix
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