The company that killed Blockbuster is now buying the biggest studio in Hollywood.
Netflix (NFLX) co-CEOs Ted Sarandos and Greg Peters went on the defensive today, justifying their massive $82.7 billion all-cash offer for Warner Bros Discovery’s (WBD) studio and streaming assets. The move marks a stunning reversal of Netflix’s long-standing “build, don’t buy” philosophy.
📉 THE MARKET REACTION: Investors remain skeptical.
- Stock Drop: Netflix shares are down >15% since the initial offer on Dec 5.
- Buyback Suspension: The aggressive push has forced Netflix to suspend its share buyback program.
- Debt Load: Netflix has secured a $67.2 billion bridge loan (increased by $8.2B on Tuesday) to finance the deal.
🗣️ THE CEO PITCH: Why the sudden change of heart?
- The “YouTube” Threat: Sarandos admitted that tech giants like YouTube have fundamentally changed TV viewing, forcing Netflix to evolve.
- Theatrical Pivot: Peters called Warner’s theatrical business “mature” and “well-run”—a 180-degree turn from Netflix’s previous stance that theaters were outdated.
- Prestige Power: The acquisition includes HBO, which Peters described as the ultimate brand for “prestige TV.”
🏰 THE ASSETS: Netflix is trying to outbid Paramount Skydance to secure:
- Franchises: “Game of Thrones,” “Harry Potter,” and the DC Universe.
- Library: 100 years of Warner Bros deep content.
- Production: A massive expansion of physical production capabilities.
💡 ANALYST TAKEAWAY: This is a defensive move disguised as an offensive one. Netflix has realized that to compete with “Big Tech” (Amazon/Google) and “Big Media” (Disney/Paramount), it needs an IP vault that takes decades to build. By buying Warner, Netflix instantly acquires a century of culture. However, the regulatory hurdles will be immense—expect the FTC to scrutinize whether owning the world’s largest streaming service and one of the largest studios stifles competition.
👇 Media Strategists: Can Netflix integrate a legacy studio culture like Warner Bros without destroying its own agile DNA?