And Just Like That… Netflix’s Warner Bros. Takeover Will Reshape The Business, End The Streaming Wars & Likely Bring Another Culture Clash

At Netflix’s holiday/awards season kickoff party Tuesday night, one topic was strictly off-limits, the then-ongoing bidding for Warner Bros. Discovery, in which Netflix was competing against Paramount Skydance and Comcast.

Unlike Paramount Skydance CEO David Ellison, who pulled out from his Wednesday appearance at the NYT’s DealBook Summit, Netflix co-CEO Ted Sarandos showed up at the streamer’s off-the-record event, mingling for hours and taking pictures with talent, including Jacob Elordi, Ted Danson, Rian Johnson and Mike Schur.

But if a reporter broached the WBD sale in any way, even as a joke, Sarandos would walk away. The Netflix boss clearly was not going to do anything that might jeopardize his company’s chances in the high-stakes auction.

Forty eight hours later, Netflix walked away as the winner, sealing an $82.7B deal with WBD for its Warner Bros. film and television studio as well as HBO/HBO Max.

This is a stunning development that comes exactly 15 years after the infamous comments by former HBO topper and CEO of parent Time Warner Jeff Bewkes, who in December 2010 dismissed Netflix as “the Albanian army” and a fad that would fade away.

Three months later, Netflix spectacularly outbid HBO for House of Cards with a two-season, 26-episode order vs a pilot pickup from the legacy network to announce itself as a original programming player and a disruptor ready to take down the traditional TV industry.

It has been doing just that for 15 years — from changing viewing habits to changing TV shows’ business model, spelling the end of the lucrative talent backend deals, to establish a new industry standard that is now followed by others.

The global streamer is now in pole position to take control of one of the most valuable film and TV libraries with access to iconic IP, from DC, Harry Potter and Game of Thrones to The Bachelor, The Big Bang Theory as well as Friends, which had done very well on Netflix until WBD moved it to HBO Max.

The deal comes with some fine print — through the deal, Netflix will also will find itself in the challenging broadcast business via Warner Bros. TV’s slate that includes shows such as ABC’s Abbott Elementary, CBS’ Georgie & Mandy’s First Marriage and NBC’s Brilliant Minds, in the low-margin daytime syndication business via WBTV’s The Jennifer Hudson Show, and it will also inherit a daily entertainment newsmagazine, Extra.

Game over

With the Warner Bros. acquisition, Netflix will effectively win the streaming wars by owning the #1 and #3 SVOD platforms to challenge YouTube’s ascent. It will also likely win the Emmy race as the two longtime main rivals, Netflix and HBO/HBO Max, would combine forces for a practically guaranteed landslide victory.

If the merger — which up until a month ago would’ve been considered unthinkable — goes through amid potential regulatory hurdles and legal threats from Paramount Skydance, it will bring together two companies with a fundamentally different approach to the business, philosophy and culture.

Ever since Netflix entered the original programming space, its strategy has been built on exclusivity. It requires exclusive global rights for its series. It also only produces shows for its own platform.

Compare that with Warner Bros. Television, which was built as a major independent studio supplying everyone. A possible merger would give Netflix a large scale TV production studio in WBTV but also put Netflix in a position where for the first time it would be supplying (through WBTV) hits to its rivals, including Apple TV’s Ted Lasso and Presumed Innocent. (WBTV already produces a number of popular Netflix series, such as Running Point and Untamed, as well as the high-profile upcoming Scooby-Doo adaptation, which Netflix will now own.)

The philosophical differences are even deeper in features. Netflix has disrupted the movie business by undermining theatrical distribution, with Sarandos calling movie-going experience “outmoded for most people” as recently as several months ago. On the call announcing the merger this morning, Sarandos expressed commitment to theatrical releases while reiterating the streamer’s insistence on truncated windows, noting that “over time the windows will evolve to be much more consumer friendly.”

The Warner Bros. staff may be in for another culture shock as Netflix has a very distinct work culture marked by high level of intensity. The studios have gone through a couple of different owners over the past couple of decades through the failed AOL and AT&T mergers, each bringing a different work environment. Just three years ago, they went through a culture clash following the company’s acquisition by Discovery.

The concern may be brought up at the Warner Bros. Discovery town hall that will be held later this morning.

Carry on… for now

If the deal makes, it won’t be for awhile; the merger won’t close until after WBD’s global networks division, Discovery Global, spins out into a new publicly-traded company, a move now pushed to Q3 2026.

All in all, the WB studio and streaming divisions will likely carry on and do business the way they are used to for up to 2-3 years, with WBD CEO David Zaslav rumored to stay at the helm, at least early on. After that, all bets are off.

“I’d say that right now you should count on everything that has planned on going to the theaters through Warner Bros. will continue to go to the theaters through Warner Bros.,” Sarandos said this morning.

Similarly, “it’s quite early to get into specifics” about how exactly HBO will be combined with Netflix, the streamer’s co-CEO Greg Peters said this morning, adding that “we’ve also seen that some of these bundles and models, if you construct them correctly, can have all sorts of benefits with retention and engagement.”

At least for now, HBO being folded into a tile on Netflix does not seem to be on the table.

There is no rule book for what we might expect because what we have is unprecedented — the biggest streamer in the world acquiring arguably the largest film/TV studio, plus another top streamer. (Amazon did it on a much smaller scale with the $8.5B MGM buy.)

Blending executive teams

Following the 2019 acquisition of the Fox film and TV studios and other assets, Disney kept most of the top incoming TV executives, with a number of them, led by Disney Entertainment co-chairman Dana Walden, still there. Netflix may do the same if the merger is approved.

Casey Bloys, Chairman and CEO, HBO and Max Content, is one of the most successful TV programming executives of the past decade, and he also is believed to have a great relationship with Netflix’s Chief Content Officer Bela Bajaria. The two have negotiated licensing of classic HBO titles such as Sex and the City and Six Feet Under on Netflix.

Aside from the Warner Bros. and HBO library of IP, Bloys and his team are among the biggest draws of the transaction. Showing how much Netflix values the group, the streamer in 2024 hired HBO’s Nora Skinner to deliver for Netflix the kind of prestige drama series that have defined HBO’s brand.

The same goes for Channing Dungey, Chairman and CEO, Warner Bros. Television Group and US Networks. She has an interesting history with Netflix. After her 2018 exit from ABC, Dungey was head of drama at Netflix under Cindy Holland. She left the streamer to take the top WBTV job a month after Holland exited and was replaced by Bajaria. Sarandos was involved in Dungey’s recruitment and reportedly tried to keep her.

If Netflix’s acquisition of Warner Bros. is completed, it will continue the tech-inization of Hollywood with a third venerable, century-old studio falling into the hands of a tech company or mogul as Amazon bought MGM and Paramount is controlled by Larry Ellison.

It also would give upstart Netflix an old Hollywood cachet and deliver the ultimate revenge victory for “the Albanian army.”