After Warner Bros. Discovery said it has received acquisition overtures from “multiple parties,” top execs at Netflix were asked on their company’s earnings interview whether they see industry consolidation changing the competitive landscape — and if Netflix sees an opportunity to participate in any major M&A activity.
The upshot? Mostly a “no” on both points, although co-CEO Ted Sarandos left the door open by saying Netflix can be “choosy” about its M&A targets.
“It’s true that, historically, we’ve been more builders than buyers, and we think we have plenty of runway for growth without fundamentally changing that playbook,” Sarandos said, responding to an analyst question about M&A in the context of Warner Bros. Discovery’s announcement earlier in the day. “Nothing is a must-have for us to meet our goals that we have for the business.”
Said Sarandos, “We’ve been very clear in the past that we have no interest in owning legacy media networks, so there is no change there. But in general, we believe that we can be and we will be choosy [about acquisitions]. We have a great business. We’re predominantly focused on growing organically, investing aggressively and responsibly into the growth and returning excess cash flow to shareholders” through share repurchases.
Netflix focuses “on profitable growth and reinvesting in our business, both organically and through selective M&A,” Sarandos said. “And when it comes to M&A opportunities, we look at them — and we look at all of them — and we apply the same framework and lens that we look at when we look to invest in a build.” According to Sarandos, the questions executives ask about potential acquisitions include: Is it a big opportunity? If it’s IP, does it strengthen our entertainment offering? Is there additional value in ownership? Does it strengthen our existing capabilities somehow? And does it accelerate our existing strategy? In addition, Netflix evaluates “all these things relative to the price, relative to the opportunity cost, and relative to other alternatives,” Sarandos said.
Greg Peters, Netflix’s other co-CEO, chimed in about how M&A might change the competitive landscape. “We’ve always faced significant competition. We still face it today,” he said, noting industry consolidation over the years that has included Disney buying 21st Century Fox, Amazon buying MGM, AT&T acquiring Time Warner Inc., and Discovery buying Time Warner to form Warner Bros. Discovery.
“But you know, none of those mergers were a fundamental shift in the competitive landscape, and we have seen also a wide range of outcomes from such mergers,” Peters said, echoing previous comments he’s made on the topic. “So watching some of our competitors potentially get bigger via M&A does not change, in and of itself — at least our view — on the competitive landscape, and we don’t think it changes the substance of the challenge that our competitors face, specifically the range of activities that we and our competitors have to get great at,” which he said “has never been assembled in a single company before.”
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“Think about, you know, producing film and TV shows across multiple genres and multiple languages in dozens of countries around the world, trying to figure out how to incorporate the latest technology, including, you know, AI and Gen AI,” Peters said. “Our competitors are seeking to get better at all those things, of course, as well, but you have to do that by the hard work of developing those capabilities in the trenches day to day. You don’t get there simply by buying another company that is also still developing those same capabilities.”
The two execs made the comments Tuesday on the company’s earnings interview for the third quarter of 2025. Netflix revenue was in-line with forecasts but its earnings per share missed Wall Street forecasts due to a dispute with Brazilian tax authorities.
Warner Bros. Discovery, in disclosing that its board is evaluating various strategic options, didn’t say which buyers have expressed an interest in snapping up all or part of Warner Bros. Discovery. One of them is known to be Paramount Skydance, headed by chairman and CEO David Ellison. On Tuesday, WBD reportedly turned down a mostly cash bid of “nearly” $24 per share from Paramount for the entire company.
From Variety US