Netflix Inc. co-Chief Executive Officers Greg Peters and Ted Sarandos tried to reassure employees’ concerns about the company’s bid for much of Warner Bros. Discovery Inc., reiterating that there is no business overlap and therefore won’t be any studio closures.
“This is going to be a complex process over the next year or so,” the executives said in a letter posted to the company’s internal blog and published in a securities filing.
Netflix’s $82.7 billion bid for Warner Bros. streaming and studios businesses was agreed to by the Warner Bros. board but Paramount Skydance Corp. has swooped in with a hostile $108 billion bid for the entire company. The Warner Bros. board is expected to respond to Paramount’s offer by the end of the week, and Paramount has indicated that it may not be its best and final bid.
“I would not be surprised to see a higher bid from Paramount, and I think there would be a good case for a $33-per-share offer,” said Alex Fitch, a fund manager at Harris Associates, which holds a $2.85 billion stake in Warner Bros. Harris estimates that the Warner Bros. linear assets, which include cable networks like CNN, TNT and Discovery, could be worth as much as $3.50 a share, Fitch said.
If Netflix’s acquisition of Warner Bros. is approved, Netflix will take over one of Hollywood’s oldest and most storied studios in one of the biggest ever media deals. It would also gain control of its one-time inspiration, HBO.
The executives laid out the company’s case and moved to quell industry concerns about job losses and the end of theatrical releases.
They promised “no overlap or studio closures” amid concerns the mega-deal would curtail jobs in an industry already impacted by the rise of streaming platforms and artificial intelligence.
“This deal is about growth,” the pair wrote. “We’re strengthening one of Hollywood’s most iconic studios, supporting jobs, and ensuring a healthy future for film and TV production.”
Peters and Sarandos said they were committed to releasing Warner Bros. movies in theaters, following concerns that Netflix would prioritize a streaming-first model. Sarandos has previously described going to the cinema as an “outdated” experience.
“We haven’t prioritized theatrical in the past because that wasn’t our business at Netflix,” the co-CEOs wrote on Monday. “When this deal closes, we will be in that business.”
The battle for Warner Bros. is expected to face stiff regulatory scrutiny and each bidder claims to have the upper hand.
“We’re confident we’ll get the approvals we need to make it happen,” the Netflix leaders wrote. “The fundamentals are clear: this deal is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth.”
Peters and Sarandos pointed to US TV view time data from Nielsen that suggests a Netflix-Warner Bros. combination would have a smaller view share percentage than YouTube or a potential Paramount and Warner Bros. tie-up.
Democratic Senator Elizabeth Warren of Massachusetts has called Paramount’s offer a “five-alarm antitrust fire.” She had previously branded Netflix’s bid as an “anti-monopoly nightmare.”