Posted in: Movies, Netflix, TV | Tagged: netflix

Netflix CEO: Paramount/WBD Deal Will Require More Than $16B in Cuts

Netflix co-CEO Ted Sarandos had a lot to say about the streamer and the recently announced deal between Paramount and Warner Bros. Discovery.

Now that the streaming service has walked away from the Warner Bros. Discovery mess $2.8 billion richer, leaving David Ellison's Paramount Skydance to deal with the regulatory approval process, Netflix co-CEO Ted Sarandos offered some insights on a number of issues during an interview with Bloomberg. We've included some key highlights, but the entire interview is definitely worth your time, with Sarandos covering when/why the decision was made to walk away, how much influence the Trump Administration had/hadn't on his dealings, how deep the cuts will be if/when the Paramount Skydance/WBD deal is approved, if he views a combined Paramount+/HBO Max as a threat, and more:

When & Why Netflix Made the Decision to Not Raise Its WBD Bid: "We had a very tight range that we'd be willing to pay and made that offer back when we closed this deal. We hadn't moved much from that, except for moving to cash, which served to move the deal faster. I'm happy where we got in and happy where we got out. We knew right away, when we got the notice on Thursday, that they had a superior offer and the details of that deal. We knew exactly what we were gonna do."

Sarandos Didn't Feel Pressure From Trump Administration: "I don't know that there was growing political resistance. It was a growing narrative of political resistance. But we were on a normal regulatory path. I was in DC on Thursday for a scheduled meeting with DOJ from a couple weeks ago to go through some questions about the deal. It was a very productive meeting, nothing out of the ordinary. Nothing had shifted or changed dramatically that hauled me to DC."

That Included the Senate Hearing, Republican AGs' Letter & Department of Justice Investigation: "This was completely normal. This story has been fed out for everybody, but it's just not accurate. We were not only involved with the DOJ, we were involved with 50 regulatory bodies around the world. These things have been going exactly the way they should," Sarandos shared. "It was not a group of bipartisan AGs. It was a group of Republican AGs. This deal is approved by the Department of Justice, not by the Senate or by the committee. The president stayed completely neutral on this. The DOJ was doing what they do, and they had been quite diligent."

Sarandos Spoke with Susan Rice About Comments, Never Considered Moving Her From Board: "I don't want or expect our board members to be out talking about politics ever, let alone in the middle of a deal, but they do have the right to speak, and she wasn't speaking for Netflix."

Sarandos: Ellison's Paramount "Should Be Highly Scrutinized" Like Netflix Was: "It should be highly scrutinized the way I'm glad that ours was highly scrutinized. It should be looked at with every bit of the same microscope. Remember, we were asked to go and testify. David and I both were. I came."

Sarandos: Paramount Skydance/WBD Deal Will Require "In Excess of $16 Billion" in Cuts: "This deal is dependent on a lot of cost-cutting. We were in the books of Warner Bros., and the biggest cost centers are people in productions. There'll be cuts in excess of $16 billion. They are telling people who lend them the money that's gonna happen in 18 months or so. It would be less production, less people working."

Sarandos: Paramount/WBD Will Still License to Netflix: "If they are six or seven times levered, they need to make some money, and we're buyers. So I can't imagine that's going to be a problem."

Sarandos: Paramount+/HBO Max Combo Not Much of a Threat: "One and a half and one and a half still equals three [a reference to Nielsen's numbers on percentage of streaming viewing]. Yeah. I wish them luck. They've got regulatory hurdles to clear. Even when we were thinking about keeping these businesses together and running, we knew that we had a difficult task ahead of integration. I can't imagine doing all that and trying to cut billions and billions of dollars. Today, Paramount has half of the people that they had one year ago. So that gives you some sense of where this is heading for the town and for the business."

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