Inside Netflix’s $82.7 Billion Gamble: How Ted Sarandos Outmaneuvered Hollywood for Warner Bros. Discovery
A behind-the-scenes look at how Netflix shocked Hollywood, outbid its rivals, and set up a legal battle that could redefine streaming, movie theaters, and the future of entertainment.
Twenty-five years after Blockbuster refused to buy Netflix for $50 million, the world’s largest streaming platform is now acquiring one of Hollywood’s most iconic studios.
Last week, Netflix announced that it will pay $82.7 billion (including debt) to acquire Warner Bros. Discovery. At a 120% premium over Warner Bros. Discovery’s closing price before acquisition rumors began, Netflix beat out Paramount and Comcast in a bidding war, securing the IP to major franchises like the D.C. Universe (Batman, Superman), Harry Potter, Game of Thrones, The Lord of the Rings, and HBO.
Adding HBO Max’s 130 million streaming subscribers to Netflix’s 300 million will create a platform twice the size of its next-largest competitor. And while Netflix has said it “expects” to still release WBD’s movies in theaters, the exclusive windows enjoyed by these theaters today will certainly shrink to get movies on Netflix sooner.
It’s not hyperbole to say that everyone in Hollywood is freaking out. On the surface, this is a classic antitrust violation. If Netflix and WBD join forces, streaming prices will increase, hundreds of movie theaters will go out of business, and thousands of actors, writers, and production staff will be forced to accept worse terms and wages.
But while everyone seems to be holding out hope that the Department of Justice will block this deal, I’m not so sure that will happen. While President Trump certainly would have preferred Paramount buy WBD (because it would have given the Ellison family control of CNN), Netflix will deploy a unique strategy to gain DOJ approval.
So for today’s newsletter, we’re going to dig into the details, including how this deal came together, why Paramount lost the bidding war, what it means for movie theaters, how Netflix will approach its legal battle with the DOJ, and, more importantly, why the math still works for Netflix even if the DOJ ends up blocking the deal. Let’s go…