Ted Sarandos, co-CEO of Netflix, acknowledged that it was disappointing for the streamer to not win the deal for Warner Bros. Discovery‘s streaming and studios businesses. But he said the company “built its M&A muscle” through the experience — and tested its “investment discipline” to have the resolve to abandon the WB bid.
On Feb. 26, Netflix abandoned its all-cash $83 billion deal to buy the WB assets after David Ellison’s Paramount Skydance upped its hostile bid for WBD in its entirety to $31/share — leaving Paramount the winner of a debt-fueled takeover of the media conglomerate.
“The most important benefit of this entire exercise… was that we tested our investment discipline and when the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away,” Sarandos said on Netflix’s first-quarter 2026 earnings interview. “And doing it at this level, I think sets up our teams to understand that that’s the expectation of them day to day.”
Sarandos added that “we met a bunch of great people in WBD during this process. So if there’s any emotion in all of this, it was the disappointment of not getting to work with those folks. And we were really looking forward to that.”
Undoubtedly lessening the sting: Paramount Skydance paid Netflix a $2.8 billion breakup fee once Warner Bros. Discovery terminated its merger agreement with Netflix. “Now we move forward, and we move forward with $2.8 billion in our pocket that we didn’t have a few weeks ago,” CFO Spence Neumann said at an investors conference March 4.
Overall, Netflix came through the process “with no change in our capital allocation philosophy,” Sarandos told analysts.
“So at the risk of being a broken record, I just want to remind you that we said this from the beginning, that the WB deal was a nice to have, not a need to have,” Sarandos said when asked about the abandoned Warner Bros. pact.
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Sarandos continued, “We’re very confident in the core business, so we really looked at this going into it that our biggest risk was losing focus on our core business while we were working on the transaction. So as you can see from our Q1 results, we did not lose focus. We were very encouraged by the team’s ability to stay focused on our core business while exploring this opportunity as well.”
Netflix historically has been “builders and not buyers,” and there were “certainly questions internally and externally about our ability to do a deal of this size,” Sarandos said.
“What we did learn, though, was that our teams were more than up to the task. We’ve learned so much about deal execution, about early integration. We’re really proud of the teams that did all that work,” said Sarandos. “We were proud to win the bid. We were confident in our ability to get to the finish line with regulators for the approvals that we needed… but mostly we really built our M&A muscle.”
Sarandos also noted that “we invest in the business both organically and opportunistically.” He cited Netflix’s recent acquisition of Ben Affleck’s InterPositive AI filmmaking tools start-up as an example of the latter. Netflix reportedly could pay up to $600 million for InterPositive, contingent on it hitting certain performance targets.
From Variety US