Netflix CEOs explain why they’re buying Warner Bros. NOW ; Reveal they are confident in regulators’ approval

In a historic move that shook the industry, Netflix officially buys Warner Bros. and HBO Max. The announcement came after months of speculation and a tense bidding war involving the streamer, Paramount Skydance and Comcast. Netflix’s emergence as the auction’s ultimate winner came as a surprise, especially since, for a time, David Ellison’s Paramount appeared to be the best candidate to acquire Warner Bros. Discovery.

People have a lot of questions regarding the deal, and during a call with Wall Street analysts (via The Hollywood Reporter), Netflix co-CEOs Ted Sarandos and Greg Peters explained their reasons for buying the company. As a reminder, in October, shortly after the WBD sale was announced, Netflix executives said they were not looking to participate in such a potential acquisition. Peters specifically stated at the time:

“None of these mergers constituted a fundamental change in the competitive landscape, and we have also seen a wide range of outcomes from such mergers. So seeing some of our competitors potentially expand through M&A does not in itself change, at least our view of the competitive landscape.”

During this latest call, the co-CEO was asked about this response. He said his comments were about companies not understanding the entities they were merging with. Netflix, he said, is fully aware of the assets it is acquiring:

“Historically, a lot of these mergers haven’t worked. A lot of these failures that we’ve seen historically are because the company that was doing the acquisition didn’t understand the entertainment business. They didn’t really understand what they were buying. We understand that the assets that we’re buying, the core elements of Warner Bros. are a lifeline that doesn’t apply to us.

There are many concerns in the industry regarding the merger, both in terms of potentially reducing Warner Bros.’ theatrical output. and fear that Netflix will prioritize streaming over theatrical releases. Sarandos, however, says the company’s acquisition of WBD will be a healthy development for the industry:

“I think it’s a good story because it’s a healthy, growing company that’s going to help another company grow in a healthier way and open up an audience that these creators have never had before. I think the opportunities are great for American production and for the entertainment industry as a whole to be much more active than they have been in recent years.”

Netflix’s deal with Warner Bros. still needs to be regulated. There have been speculations and reports indicating the possibility that Netflix may encounter obstacles during this process. A group of creatives, for example, recently banded together to submit a letter to Congress (via Variety), expressing their fears about a WBD-Netflix merger. The letter requested that the transaction receive the “the highest level of antitrust scrutiny”.

However, Sarandos doesn’t seem worried. In fact, he seems pretty confident the deal will go through. The co-CEO explained that he views the merger as “consumer-friendly” and “creator-friendly”, and expressed Netflix’s intention to work with authorities to be able to bring the deal to fruition:

“This deal is pro-consumer, pro-innovation, pro-worker, pro-creator, pro-growth. And you know, our plans here are to work very closely with all the relevant governments and regulators, but we’re really confident that we’re going to get all the necessary approvals that we need. These two companies are complementary, as Greg points out. [Peters] “I said this before, and they’re also valued companies, which is really fantastic.”

It was also revealed that Netflix intends to consolidate its estimated $16 billion annual content spend with WB’s annual content budget. Despite this, it appears the industry can expect Warner Bros.’ sales to decline. prolific content production, as CFO Spence Neumann told analysts they would eventually implement “content effectiveness […] over time as well.”