The battle for Warner Bros. appears to be over, although we’ve said that once before. After initially losing out to Netflix, Paramount initiated a hostile takeover that was ultimately successful after the studio under David Ellison upped its bid to a point that Netflix was unwilling to meet. The change in fortune for WB was a shock to many, and now Netflix CFO Spencer Neumann has given us some slight insight into why the streaming giant walked away.
Appearing at the Morgan Stanley Media & Technology Conference, Neumann was specifically asked why Netflix decided not to compete with Paramount following its increased offer for Warner Bros. The CFO started with a joke (via Deadline), making reference to the prolonged battle that was waged over the studio. He said…
We’re not still in it?! So hard to get a laugh in this room!
Once the jokes were made, however, Spencer Neumann gave a bit more actual insight into the choice. In the end, he says it simply came down to a financial decision. While the price Netflix had initially agreed to pay for Warner Bros. was seen as the right price for the right assets, paying more just didn’t make sense. He explained…
The short answer is that it’s all about price … This was always a position of offense, not defense. [The assets were] nice to have at the right price, but not must-have at any price.
Price was almost certainly a big factor. After the Warner Bros. board accepted Paramount’s new proposal, it gave Netflix a few days to respond. However, it was only hours later that Netflix announced that it would not be beating the offer. That indicates there was never really much discussion about spending more money.
However, there was likely more to the calculus than simply the price. The fact is that many in Hollywood didn’t love this merger in the first place, and were critical of the decision when Netflix was the one taking over. There were a lot of worries that the streamer, which has never been shy about its feelings that the theatrical distribution model was old news, would reduce or eliminate the number of WB movies in theaters. There were also concerns on the streaming front if Netflix took over HBO Max.
People may not have loved the idea of Netflix buying Warner Bros., but there’s a lot of evidence that people like the idea of Paramount buying Warner Bros. even less. There are expected to be far more layoffs under the Paramount deal than there would have been under Netflix. And there are still competition concerns as Paramount has already announced plans to merge Paramount+ with HBO Max.
Having walked away, Netflix now looks like the good guy among those who think the Paramount deal is worse for Hollywood. And not only does it not cost Netflix any money, but the company has actually made money, as there was a nearly $3 billion “kill fee” attached to its deal with Warner Bros.
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