Netflix CEOs Defend Warner Bros. Deal in a memo to employees
Ted Sarandos and Greg Peters, Netflix’s co-CEOs, sent a memo to staff expressing their belief that the company’s deal to acquire Warner Bros. and HBO Max to take over will weather a counterattack from David Ellison’s Paramount Skydance and clear regulatory hurdles.
Netflix’s mega deal to buy Warner Bros. studios, HBO and HBO Max, with an enterprise value of $82.7 billion, was announced on December 5. Three days later, Paramount Skydance responded with hostility, with Ellison announcing that the company would take its $30/share offer for all of WBD directly to shareholders. Paramount’s current offer has an enterprise value of $108.4 billion.
Regarding Paramount’s hostile bid, Sarandos and Peters, echoing comments they have previously made, said in the memo to employees: “It was completely expected. But we got a solid deal. It’s great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry. We are confident we will reach the finish line – and we are genuinely excited about what lies ahead.”
The memo to Netflix staff was announced in an SEC filing Monday. The memo was released on Netflix’s Take 5 blog, which “aims to provide employees with clarity and understanding on strategic bets/issues, and an alert on important news in approximately five minutes of reading. Internally only,” the filing said.
In a Q&A in the note to employees, Sarandos and Peters answered this question: Some think this is the end of Hollywood. What is our response to that? The co-CEOs wrote: “This is something we’ve been hearing for a long time, including when we got into the streaming business. Our position then and now is the same: We see this as a win for the entertainment industry, not the end of it. This deal is about growth: Warner Bros. brings companies and capabilities we don’t have, so there is no overlap or studio closures. We’re strengthening one of Hollywood’s most iconic studios, supporting jobs and ensuring a healthy future for film and TV production.”
The two CEOs reiterated that they are “confident” that Netflix will receive the regulatory approvals needed to close the WB deal, as well as their commitment to keep Warner Bros. films in theaters.
“Theatrical is an important part of that [the Warner Bros.] business and legacy, and we don’t want to change what Warner Bros. makes it so valuable. If this deal had been made two years ago, hits like ‘Minecraft’ and ‘Superman’ would still have premiered on the big screen the way they did – and that’s how we want to keep that going,” the memo said. “We haven’t prioritized theatrical in the past because that wasn’t our business at Netflix. When this deal closes, we will be in that business.”
Looking ahead, the co-CEOs wrote: “We have a small but mighty team of experts working on this so the rest of us can stay focused on the big 2026 ambitions we’ve set for our company,” Sarandos and Peters wrote. “We still have tremendous potential ahead of us – even before we bring Warner Bros. into the picture – so our focus must remain on realizing that potential based on our organic growth. We know that’s easier said than done with all the headlines and speculation, but continuing to deliver results for our members is the best thing we can focus on.”
Read the full memo from Sarandos and Peters:
OUR DEAL WITH WARNER BROS
By: Greg Peters and Ted Sarandos
As the news surrounding our deal with Warner Bros. continued this week, we wanted to keep you as informed as possible. Our position has not changed: we are convinced that the joining of forces of Netflix and Warner Bros. will provide consumers with more choice and value, enable the creative community to reach an even larger audience with our combined distribution, and fuel our long-term growth. We entered into this deal because their extensive portfolio of iconic franchises, expansive library and strong studio capabilities will complement, not duplicate, our existing business.
This will be a complex process over the coming years and there’s a lot we can’t share, but we wanted to give you our thoughts on some of the most pressing questions we’ve heard since we connected last week.
What do we think of Paramount’s hostile bid? It was entirely expected. But we got a solid deal. It’s great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry. We are confident that we will reach the finish line, and we are genuinely excited about what lies ahead.
Do we have confidence that the regulators will approve this? We believe in this deal – in the value it creates – and we are confident we will get the approvals we need to make it a reality. The fundamentals are clear: this deal is pro-consumer, pro-innovation, pro-worker, pro-creator and pro-growth. And if you look at it through the lens of Nielsen data, even after combining with Warner Bros., our US audience share would only go from 8% to 9% – still well behind YouTube (13%) and a potential Paramount/WBD combination (14%). We believe the facts speak for themselves, and we are fully prepared to put ourselves in a strong position for approval.
Will we keep theatrical releases as part of WBD’s distribution model? Yes, we are fully committed to releasing Warner Bros. films in theaters just as they do today. Theater is an important part of their business and legacy, and we don’t want to change what Warner Bros. makes it so valuable. If this deal had been made two years ago, hits like Minecraft and Superman would still have premiered on the big screen the way they did – and that’s how we want to keep it going. We haven’t prioritized theatrical in the past because that wasn’t our job at Netflix. When this deal closes, we will be in that business.
Some think this is the end of Hollywood. What is our response to that? This is something we’ve been hearing for a long time, even when we started streaming. Our position then and now is the same: we see this as a victory for the entertainment industry, not the end of it. This deal is about growth: Warner Bros. brings companies and capabilities that we don’t have, so there is no overlap or studio closures. We’re strengthening one of Hollywood’s most iconic studios, supporting jobs and ensuring a healthy future for film and TV production.
What’s next? We have a small but mighty team of experts working on this, so the rest of us can continue to focus on the big 2026 ambitions we’ve set for our business. We still have enormous potential ahead of us – even before we get Warner Bros. – so our focus must remain on realizing that potential based on our organic growth. We know this is easier said than done with all the headlines and speculation, but continuing to deliver for our members is the best thing we can focus on.
Where is the best place to follow? As a reminder, Take 5 is for employees only. We’ve launched a public site as our source of truth for external audiences (which will continue to be updated) and it’s a resource you can share with friends and family who may also have questions of their own. You can also listen to our UBS webcast from earlier this week.
-Greg and Ted
