Hours after a federal judge cleared the last hurdle for Paramount’s acquisition of Warner Bros. Discovery, Netflix co-CEO Ted Sarandos was asked at Bloomberg Screentime whether the streamer should regret chasing Warner Bros.
No regret on the Warner Bros. bid
His answer was no. Sarandos said the plan was sound and Netflix priced the asset at the top level where its scale could still return value to shareholders; paying more would have pushed returns into negative territory. He conceded the pursuit disrupted the investor and press narrative around the business, but argued that a long-term asset can justify some short-term narrative risk.
Engagement scrutiny is partly self-inflicted
The larger debate is about engagement. Sarandos said Netflix was unsophisticated when it stopped reporting subscriber growth nearly two years ago and shifted attention to watch-time reports. In that framing, all revenue, profit and engagement were treated as equal, and he now says engagement is not a single commodity: “All engagement is not equal.”
The company is still growing: watch time rose 2% on a 200-billion-hour base in the last announcement, even with headwinds from the World Cup. But Sarandos admitted growth is not as fast as he wants.
- 200 billion hours of viewing base; latest reported growth was 2%.
- 5% of content budget goes to live events; live generates about 1% of watching.
- Double-digit revenue growth in every region in the past quarter.
Live events: smaller volume, premium value
Netflix spends about 5% of its content budget on live programming and those events generate about 1% of total watch time. Sarandos argued live does not need to lift gross engagement; its value is in the kind of attention it attracts. One hour of daytime Judge Judy does not produce the same revenue as one hour of NFL football, he said.
HBO Max-Paramount+ and Bloys
Asked about the threat from a combined HBO Max-Paramount+ service, Sarandos was deliberately noncommittal: one plus one could be two, one-and-a-half, or three. He called Casey Bloys, who will lead the merged platform, highly talented, but did not say whether he had tried to bring him to Netflix.
Talent exits are not a strategy shift
Sarandos framed the exits of the Duffer Brothers, Shawn Levy, Noah Baumbach and David Fincher as individual choices, not a retreat from overall deals. The Duffers wanted theatrical tentpoles rather than more TV; Levy’s Disney tie made sense because of Star Wars commitments; Fincher simply has not chosen his next project. Netflix also points to Ryan Coogler’s June signing and Shonda Rhimes’ renewed pact as counterevidence that talent is not fleeing.
Source: Deadline
