In a memo to employees divulged this morning in an SEC filing, Netflix Co-CEOs Greg Peters and Ted Sarandos call their pending $83B acquisition of Warner Bros. “a win for the entertainment business.”
Wall Street, however, isn’t entirely convinced. One new report Monday from MoffettNathanson’s Robert Fishman urges the company not to take the bait if and when Paramount increases its hostile bid. Far better, Fishman argues, for the streaming giant to “bow out of the bidding war, put their heads down, and continue to execute upon the strong hand they already have.” Investors largely agree with that sentiment, with shares in Netflix slumping 10% since the company’s formal proposal was announced and even more than that since the company’s interest in Warner first became known.
The memo (read it in full below) breaks no new ground and refers employees to the duo’s appearance last week at the UBS Global Media and Communications conference in New York for further information. As to whether the deal will signal “the end of Hollywood,” Peters and Sarandos say they’ve been hearing that doomsday rap for more than a decade. “We see this as a win for the entertainment industry, not the end of it,” they wrote. “This deal is about growth: Warner Bros. brings businesses and capabilities we don’t have, so there’s 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.”
They also say they expect regulators to approve the combination, reiterating their vow to preserve Warner’s theatrical business.
Fishman says the situation is “stuck in limbo” until the next development, which will likely be Paramount raising its bid. The company has offered $108 billion, all in cash and including the assumption of debt, for all of Warner Bros. Discovery. Netflix is bidding only on the studio-and-streaming part of the company.
The deal is far more of a must-have for For Paramount than it is for Netflix, Fishman argues. That will compel the company to raise its offer, especially given the fact it is backed by the wealth of Larry Ellison, co-founder of Oracle and one of the world’s richest men.
A combined WBD-Paramount entity would be “a formidable scaled streaming competitor,” Fishman writes, “with a DTC business closer to Disney and Amazon (though still well behind Netflix), and meaningful cost-saving opportunities across linear networks and filmed entertainment.”
With a bid currently at $30 a share, Paramount is expected to boost it into the low- or mid-30s, according to Fishman. Paramount’s final offer price will “ultimately depend on how aggressive Netflix is willing to be to hold onto these assets. And in doing so will its all-cash offer risk doing irreparable harm to the balance sheet with a winning bid?”
Here is the full memo from Peters and Sarandos:
OUR DEAL WITH WARNER BROS
By: Greg Peters and Ted Sarandos
As news around our deal with Warner Bros. continued this week, we wanted to keep you as informed as we can. Our position hasn’t changed: we strongly believe that Netflix and Warner Bros. joining forces will offer consumers more choice and value, allow the creative community to reach even more audiences with our combined distribution, and fuel our long-term growth. We made this deal because their deep portfolio of iconic franchises, expansive library, and strong studio capabilities will complement—not duplicate—our existing business.
This is going to be a complex process over the next year or so and there’s a lot we won’t be able to share, but we did want to give you our thoughts on some of the most pressing questions we’ve heard since we connected last week.
How do we feel about Paramount’s hostile bid? It was entirely expected. But, we have a solid deal in place. It’s great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry. We’re confident we’ll get it over the finish line—and we’re genuinely excited about what’s ahead.
Are we confident regulators will approve? We believe in this deal—in the value it creates— and we’re confident we’ll get the approvals we need to make it happen. The fundamentals are clear: this deal is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth. Also, if you look at it through the lens of Nielsen data, even after combining with Warner Bros., our view share would only move from 8% to 9% in the US—still well behind YouTube (13%) and a potential Paramount/WBD combination (14%). We believe the facts speak for themselves, and we’re fully prepared to put ourselves in a strong position for approval.
Will we preserve theatrical releases as part of WBD’s distribution model? Yes—we’re fully committed to releasing Warner Bros. movies in theaters, just as they do today. Theatrical is an important part of their business and legacy, and we don’t want to change what makes Warner Bros. so valuable. If this deal had happened two years ago, hits like Minecraft and Superman would still have premiered on the big screen as they did—and that’s how we plan to keep it. 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.
Some feel this is the end of Hollywood. What’s our response to that? This is something that we’ve heard for a long time—including when we started the streaming business. Our stance 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 businesses and capabilities we don’t have, so there’s 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’ve got 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 established for our business. We’ve got huge potential still ahead of us—even before we factor in Warner Bros.—so our focus should 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 for our members is the best thing we can focus on.
Where is the best place to follow along? 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 be updated further—and it’s a resource you can share with friends and family who might have their own questions. You can also listen to our UBS webcast from earlier this week.
-Greg and Ted
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source deadline.com ’
