Netflix CEOs Ted Sarandos and Greg Peters weigh in on media M&A

Netflix co-CEO Greg Peters weighed in on big media mergers and acquisitions again today as Warner Bros. Discovery has officially weighed in, calling studio mergers a non-solution to the industry’s challenges. “You have to get there by working hard to build those capabilities every day. You won’t get there by just buying another company that’s also still building those same capabilities,” he said during the giant streamer’s quarterly earnings webcast.

“Think about Disney Fox and Amazon taking over MGM, Time Warner and AT&T, and then Discovery and Warner. But you know, none of those mergers were a fundamental change in the competitive landscape. view, the competitive landscape, and we do not believe this changes the The bulk of the challenge our competitors face – particularly the range of activities in which we and our competitors must excel, has never been brought together in a single company before.

“Think about producing films and TV shows in multiple genres and multiple languages ​​in dozens of countries around the world. We’re trying to understand how to integrate the latest technologies, including AI and AI generation. We’re trying to understand how to create better product experiences that can better serve consumers around the world. What about customer acquisition and retention? How to optimize global payments? How to optimize global partnerships? There’s so much,” he said. He doubled down on his comments at the conference earlier this month when he rightly disparaged the track record of big media mergers and said a Netflix bid for WBD was unlikely.

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Warner Bros. found out earlier today that it had received interest from multiple parties surrounding a deal for all or part of the company – the specific party being studio Warner Bros. and streaming assets. The newly merged Paramount Skydance, led by David Ellison, backed by deep-pocketed Oracle chairman Larry Ellison, very much wants it, but WB rejected the initial offers as too weak. There is speculation about possible play by other big, cash-rich tech companies or NBCUniversal’s parent company, Comcast, a large media company with a strong balance sheet.

Could one or more come up with an offer to raise Paramount’s price? Comcast made a run at Fox in 2018 after the Murdochs already had one in hand from Disney, launching a bidding war. Comcast ultimately withdrew its offer and Disney took over, but at a price.

Oracle-backed Ellison said, without giving many details, that his expanded business would rely heavily on technology. Another question, then, is whether a Paramount-Warner combination could potentially result in a different, more forward-thinking trajectory than the traditional series of media mergers ticked off by Peters.

“It is our responsibility to consider every significant opportunity. We have a clear framework for evaluating these opportunities, and we will do whatever we think is best to do,” Peters said.

Co-CEO Ted Sarandos seemed slightly less passionate. “We have been very clear in the past that we have no interest in owning traditional media networks, so there is no change in that area.”

He didn’t mention the studios.

Warner Bros. moves forward with a separation of the company into Warner Bros. (streaming and studios) and Discovery Global (linear networks) as it explores its strategic options.

“When it comes to M&A opportunities, we look at them, and we look at them all,” asking ourselves, “Is this a big opportunity? First question. Second, if it’s intellectual property, does it strengthen our entertainment offering? Is there additional value in the property? Does it strengthen our existing capabilities in any way? Does it accelerate our existing strategy? And you look at all of these things compared to the price, in relation to opportunity cost and in relation to other alternatives.”

When asked if the streamer was worried about losing access to third-party content, Sarandos said no. “We’ve always seen this kind of ebb and flow in terms of access to third-party content. Our competitors are also our suppliers, so they sometimes change their minds about selling to competitors. We’ve been dealing with this problem since the beginning of streaming. But, as we stand here today, we’re not dependent on any single provider. No single provider accounts for more than a small minority of our total viewing hours. And more importantly, I think is that we’ve proven time and time again that licensing to Netflix is the best way to grow your audience, generate revenue, and create value for your intellectual property, whether it’s Suits Or Peaky Blinders or Break the bad. We have played a very positive role in the life cycle of other people. Intellectual property.