Netflix has publicly reasserted its commitment to acquiring assets from Warner Bros. Discovery (WBD), despite a hostile, higher-value bid launched by Paramount Skydance. In a letter to employees yesterday, Netflix co-CEOs Greg Peters and Ted Sarandos confirmed that the streaming giant’s decision to pursue the deal remains unchanged.
Earlier this month, Netflix successfully secured WBD’s vote for its $72 billion equity deal, encompassing WBD’s television, film studios, and streaming assets. This acquisition is being pursued even after Paramount launched a subsequent hostile $108 billion enterprise bid for the entire Warner Bros. Discovery company.
A key component of the communication to employees addressed the future of Warner Bros.’ movie business. Netflix stated its firm commitment to theatrical releases of Warner Bros. films, acknowledging that this is an “important part of their business and legacy.”
The letter explicitly outlined a shift in Netflix’s operational scope: “We haven’t prioritized theatrical in the past because that wasn’t our business at Netflix. When this deal closes, we will be in that business.” The streaming leader views the hostile bid from Paramount Skydance as “entirely expected” but has chosen to stick to its initial plan.
Netflix expressed strong confidence in obtaining necessary regulatory approvals, even amid growing concerns about heavy scrutiny from competition watchdogs. The company’s argument hinges on the need for the deal to better compete with the dominance of YouTube in the broader video and media landscape.
Netflix presented a key metric to its employees:
“Even after combining with Warner Bros, our view share would only move from 8 percent to 9 percent in the US—still well behind YouTube (13 percent) and a potential Paramount/WBD combination (14 percent),” the letter stated.
However, legal experts and attorneys have voiced skepticism, suggesting that the Justice Department may not view Netflix and YouTube as directly interchangeable rivals due to their fundamentally different content, audience demographics, and business models.
Addressing employee fears regarding potential job losses, particularly due to the rise of artificial intelligence, Netflix assured staff that the deal will not result in studio closures. This is consistent with earlier statements from Paramount, which also indicated no intent to cut content budgets and a plan to run both studio units separately if its own bid were successful. Netflix’s reaffirmation of its acquisition strategy and operational plans aims to secure talent and maintain momentum during the competitive bidding phase.
Key Highlights:
- Acquisition Commitment Confirmed: Netflix co-CEOs Greg Peters and Ted Sarandos told employees the decision to acquire Warner Bros. Discovery (WBD) assets for $72 billion remains unchanged, despite a hostile $108 billion enterprise bid from Paramount Skydance.
- Entry into Theatrical Business: Netflix confirmed it is committed to maintaining theatrical releases for Warner Bros.’ films, stating that once the deal closes, the company “will be in that business,” marking a significant shift in its strategy.
- Regulatory Confidence: Netflix is confident in obtaining regulatory approval, arguing the deal is necessary to compete with the 13% US view share dominance of YouTube; post-merger, Netflix’s share would only move from 8% to 9%.
- Assurances on Jobs: The company assured employees that the acquisition will not lead to studio closures, seeking to allay fears of job losses often associated with major mergers and the rise of artificial intelligence.