In a dramatic turn of events leading up to Netflix’s acquisition of Warner Bros. for $82.7 billion, a crucial change in strategy unfolded just hours before the deal was finalized on December 4. Netflix co-CEO Ted Sarandos delivered an ultimatum to Warner Bros. Discovery (WBD) CEO David Zaslav, compelling him to agree to the deal that evening or face a withdrawal from negotiations altogether.
This high-stakes communication was not merely verbal; it was reinforced through a stern email from Netflix’s legal team, which left no room for ambiguity. It asserted that if a deal was not completed by the next morning, Netflix would withdraw its proposal entirely, thereby terminating all discussions. This firm stance ultimately pushed WBD’s board to make a decisive choice, despite a last-minute attempt from Paramount CEO David Ellison to sway their decision with a text that claimed his company’s bid was not “best and final.”
The previous months leading up to the deal had seen intense competition, particularly from Paramount, which had invested considerable time and resources in pursuing Warner Bros. However, as the negotiations unfolded, it became evident that Netflix offered a superior value proposition — a sentiment reflected in WBD’s official filings to the SEC. The filings depicted Netflix as responsive and efficient compared to Paramount, which was perceived as slower to adapt its proposals.
Sarandos’s initial outreach occurred on October 16, just six weeks before the final agreement was signed. Netflix’s aggressive move came after prolonged discussions with Paramount and other potential buyers, including Comcast. During this time, Netflix’s evaluation process included rigorous data analysis, which enabled Sarandos and co-CEO Greg Peters to come to a consensus on the merits of the Warner Bros. acquisition.
The urgency intensified as deadlines approached. Sarandos communicated the necessity for rapid decision-making, stating that Netflix’s bid offered not just a higher financial return but a more straightforward path to regulatory approval. Subsequent meetings among WBD executives revealed that Netflix was open to collaborating on plans to spin off certain business segments, making its proposal even more appealing.
Negotiations escalated rapidly after a binding proposal request was issued on December 1. By December 4, multiple rounds of legal revisions were exchanged, culminating in Sarandos’s ultimatum that ultimately sealed the deal. As a result, the landscape of Hollywood shifted dramatically, leaving Paramount scrambling to recover from the loss just days after Netflix’s acquisition was announced.
In the aftermath of this landmark deal, Zaslav hosted Sarandos and Peters at Warner Bros. lot in Burbank, a meeting meant to signify confidence and cooperative engagement within the newly structured organization.
While questions linger regarding Netflix’s motivations for such a massive acquisition, Sarandos indicated that it was part of a broader strategy to diversify and enhance Netflix’s standing across various sectors of the entertainment industry. Netflix has historically maintained a stance against certain business models, only to later embrace them as part of its growth narrative.
The acquisition of Warner Bros. is poised to expand Netflix’s reach into theatrical production and TV show creation, areas previously outside its primary focus. Sarandos expressed ambitions to build upon this historical foundation, noting plans for future growth through innovative ventures and adaptations to the dynamic marketplace. The implications of this deal are likely to reverberate throughout the entertainment landscape for years to come, shaping consumer experiences and industry strategies alike.
