Thursday’s surprising news that Netflix is ending its pursuit of Warner Bros. caught nearly everyone in Hollywood off guard, including staff at Warner Bros., Paramount, and Netflix. Of course, reactions varied, depending on which side of the Hollywood Hills you sat on, what department you belonged to, and even your political persuasion.
“It’s obviously very upsetting for our employees,” said one Warner Bros. executive, who described the news as “gut-wrenching.” Studio employees said they expected Netflix to remain silent for at least four days, hoping that it would come up with a new proposal to beat Paramount Skydance’s “superior offer.” But on Thursday afternoon, there was a quick announcement that the streamer was pulling the plug.
A few miles outside of Burbank, on Melrose Avenue, champagne was literally popped as executives celebrated the turn in fortunes and breathed a sigh of relief that the long campaign to buy Warner Brothers had been decisively won.
“Tears filled my eyes with both fatigue and happiness,” said one executive. With so much work to do to win the Warner Bros. Derby, Paramount Skydance said it was difficult to focus on the business at hand.
And at Netflix, when the streamer announced at 3 p.m. sharp that it was abandoning its bid with Warner Bros., there was immediate much commotion in the halls of Netflix’s Hollywood offices. “Whoa”s and other sounds of surprise were heard from offices and cubicles.
The biggest question inside Warner Bros. is what will happen to the company, including its staff, culture and storied Burbank property.
The fate of many jobs on the studio production side, both in film and television, is a big question mark. There is a general sense that 1+1 is still 1, as the Paramount-Warner Bros. merger will require them to part with some of their production infrastructure, especially in the television space. The company will now own Warner Bros. TV Group (which includes Warner Bros. TV, Warner Bros. Unscripted & Alternative TV, Warner Bros. Animation & Cartoon Network Studios), CBS Studios and Paramount Television Studios.
“Think of the thousands of employees who have bled at CBS and Paramount. Now there will be many more. It’s really terrible,” the insider says. “This is going to be a real game-changer for the entire community. Jobs and content will be lost. There will be no place to sell and no place to buy.”
Another Warner Bros. executive, fed up with what the company has been through over the past decade (including four owners between Time Warner, AT&T, Warner Bros. Discovery, and now Paramount Skydance), simply sighs. “Another day, another merger. I just make a show. That’s all I do. I put my head down and make a show,” she said.
There was some relief at Paramount Skydance, as the divisions were at a bit of a standstill while waiting to see how the challenge to Warner Bros. played out. In particular, some lean divisions within Paramount Skydance were holding off on adding staff, especially because they wanted to wait and see if the company would merge with Warner Bros. (which would result in layoffs). After last year’s massive layoffs, several divisions within Paramount Skydance, including cable outlets and the last vestiges of Showtime, were gutted.
As a result, some Warner Bros. staffers may have hopes that there will be a place for them in the combined company, depending on their department.
But there are more questions than answers. Will HBO Max and Paramount+ continue as separate entities or will they eventually merge? Will Paramount Skydance sell the Warner Bros. property in Burbank? And what will become of CNN, especially given Donald Trump’s desire to silence his critics?
“Look what they did to CBS News,” said a Warner Bros. Discovery official.
As for whether the Paramount-Warner Bros. merger will create a culture clash between the two storied companies, one Parr source pointed out that their studios don’t have much of a cohesive culture anymore, given the recent mergers with CBS and Skydance and all the layoffs that followed. Compare this to Warner Bros. Despite a decade of leadership changes, Warner Bros. remains a united workforce.
There is less anxiety within Netflix, with one insider saying that feelings among staff at losing the WBD contract range from relief to disappointment. There was no prompting from leadership, but there was much discussion in the hallways about whether Netflix had made the right decision to maintain financial discipline and not get caught up in the hunt.
That said, some have expressed frustration at missed opportunities to develop content from the Warner Bros. vault. There was excitement about bringing WBD’s considerable ability to produce television shows and movies to a company that does not yet have a large studio division. Another staffer said the deal’s cancellation also clears up many questions Netflix insiders had about how HBO and Netflix would realistically coexist within the same company. “I guess it doesn’t matter anymore who Casey Bloys reports to or not,” the staffer joked, referring to industry chatter about HBO’s director.
Irony abounded in a town already scarred by reduced production and massive job losses outside of Warner Bros., Netflix and Paramount Skydance. “The new company will have $87 billion in debt,” one person said. “To put this into context, Warner Bros. Discovery took on more than $50 billion in debt over four years and was only able to get it down to $30 billion. So this time the debt is double that and all you do is add Paramount to it.”
California Attorney General Rob Bonta wrote, “Paramount and Warner Bros. are not a done deal. These two Hollywood giants have not cleared regulatory scrutiny. The California Department of Justice is conducting an open investigation, and we will vigorously review it.”
Watchdog groups are also sounding the alarm, highlighting Paramount Skydance’s impending control of both CBS News and CNN. “The Ellisons have already promised the Trump administration that if given the chance, they would make fundamental changes to CNN, and we know what that means: firing journalists, writing off important stories, and replacing news with empty propaganda,” Free Press co-chief executive officer Craig Aaron said. “This deal jeopardizes our democracy by giving a family of pliant billionaires even more control over vast swaths of our nation’s news, television stations and film studios, already highly concentrated as Paramount makes good on its promise to make deep cuts to please its Wall Street backers.” Allowing more mergers to take place in the film business will harm filmmakers and industry workers.While a few Hollywood executives and Middle Eastern sovereign wealth fund managers may get rich from this deal, thousands of American workers may lose their jobs. ”
“Ellison would easily throw away the First Amendment, CNN reporters, and HBO filmmakers if they got in the way of expanding his corporate empire and lining his own pockets,” said Seth Stern, advocacy director at the Freedom of Press Foundation. “But censorship is bad for business.”
