Netflix co-CEO Ted Sarandos acknowledged that the streamer was disappointed that Netflix was unable to secure Warner Bros. Discovery’s streaming and studio deals. But he said the experience had “harnessed its M&A skills” and tested its “investment discipline” in its determination to abandon the World Bank bid.
On February 26th, Netflix terminated its $83 billion cash deal to acquire WB assets after David Ellison’s Paramount Skydance increased its hostile bid for WBD to $31 per share, making Paramount the winner of the debt-fueled takeover of the media conglomerate.
“The most important benefit of this entire effort… is that it tested our investment discipline and when the cost of this transaction exceeded the net value to our business and our shareholders, we were ready to put our emotions and egos aside and exit,” Sarandos said in Netflix’s Q1 2026 earnings interview. “And I think doing it at this level helps the team understand that that’s the expectation of the team on a day-to-day basis.”
Sarandos added, “During this process, we met a lot of great people at WBD. So if there’s a feeling to all of this, it’s disappointment that we didn’t get to work with those people. And we were really looking forward to it.”
There is no doubt that Paramount Skydance paid Netflix a $2.8 billion breakup fee after Warner Bros. Discovery terminated its merger agreement with Netflix. “We’re moving forward now. We’re moving forward with $2.8 billion in our pockets that we didn’t have a few weeks ago,” Chief Financial Officer Spence Newman said at an investor conference on March 4.
Overall, Netflix went through the process with “no change in our capital allocation philosophy,” Sarandos told analysts.
“So, at the risk of breaking the record, I want you to remember what we’ve said all along: The WB deal was a nice-to-have, not a need-to-have,” Sarandos said when asked about the scrapped Warner Bros. deal.
Mr. Sarandos continued, “We are very confident in our core business and seriously considered while working on this transaction that our biggest risk was losing focus on our core business. As such, as you can see from our first quarter results, we did not lose focus. We are very encouraged by our team’s ability to maintain focus on our core business while also exploring this opportunity.”
Netflix has historically been a “builder, not a buyer,” and there were “certainly internal and external questions about its ability to do deals of this size,” Sarandos said.
“But what we learned is that our team was more than up to the task. We learned a lot about deal execution and early integration. I’m really proud of the team that did all that work,” Sarandos said. “We are proud to have won the bid. We were confident in our ability to get to the finish line with regulators to obtain the necessary approvals…But for the most part, we actually built M&A power.”
Sarandos also said, “We invest in the business organically and opportunistically.” He cited Netflix’s recent acquisition of Ben Affleck’s AI filmmaking tools startup Interpositive as an example of the latter. According to reports, Netflix could pay Interpositive up to $600 million, conditional on meeting certain performance goals.
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