Sarandos Is highly confident Netflix will close the deal for Warner Bros.
Speakers
Summary
- Context: The interview takes place in early 2026 (referencing 2025 full-year results). Netflix is in a bidding war with Paramount for Warner Bros. Discovery's (WBD) studio and streaming assets.
- The Deal: Netflix has bid $27.75/share plus the value of "Discovery Global" for specific assets (Studios/Streaming). Paramount has offered $30/share for the entire company.
- Netflix Performance: Despite the stock dropping >30% since the deal announcement, Sarandos cites strong 2025 fundamentals (Revenue +16%, Operating Income +30%) and views the acquisition as a long-term "accelerant."
- Theatrical Commitment: Contrary to fears that a streamer acquisition would kill theaters, Netflix pledges to maintain 45-day theatrical windows for WBD films and utilize WBD's distribution network to bring Netflix originals to cinemas.
- Paramount Criticism: Sarandos aggressively attacks Paramount's balance sheet, noting they are levered 6-7x and would require ~$16B in cuts to deleverage, calling their bid a "fantasy proposal."
Trade Ideas
Netflix stock is down over 30% since announcing the WBD bid, despite posting 16% revenue growth and 30% operating income growth in 2025. Sarandos confirms they will bundle HBO with Netflix for a "steep discount" given the 80-85% subscriber overlap. The market has priced in "deal uncertainty" and "integration risk," ignoring the underlying growth. The acquisition of WBD's 100-year IP library combined with Netflix's superior monetization engine creates a massive moat. The drop offers a valuation disconnect for a company that is effectively "future-proofing" itself against AI headwinds by owning premium human-created IP. Long on the pullback. The market is overreacting to the short-term cost of the deal while ignoring the long-term monopoly power of a Netflix/HBO combined entity. Regulatory blockage (DOJ/EU) or a bidding war that forces Netflix to overpay significantly.
There is a confirmed bidding war. Netflix is offering $27.75 + the value of Discovery Global assets. Paramount is offering a $30 takeout for the whole company. WBD is the prize. Whether they sell assets to Netflix or the whole company to Paramount, a floor is effectively set near $30. Sarandos explicitly states WBD has determined it is in their "strategic best interest to sell." Long as an arbitrage/acquisition target. The asset is in play with two desperate bidders. Deal collapse due to antitrust intervention (DOJ is currently reviewing).
Sarandos highlights that Paramount is currently levered 6-7x and has promised lenders they will delever to 2x in 18 months. He estimates this requires $16B in cuts (far above the $6B Paramount publicly stated). Paramount is in a "damned if you do, damned if you don't" scenario. If they lose the bid, they remain a sub-scale, highly levered legacy media co. If they win, they must execute impossible cuts that will gut their content pipeline and revenue, likely leading to a debt spiral. Short/Avoid. The company is financially fragile and attempting a "Hail Mary" acquisition that may be mathematically impossible to integrate successfully. Paramount secures unexpected external financing (e.g., from the Ellisons/Skydance) that stabilizes the balance sheet.
Ted Sarandos
Co-CEO, Netflix
Sarandos commits to keeping WBD's 45-day theatrical windows and, crucially, states Netflix will use WBD's distribution arm to put *Netflix original films* into theaters. The market assumes a "Netflix buys WBD" outcome is bearish for theaters (direct-to-streaming). Sarandos is arguing the opposite: Netflix will actually *increase* the supply of theatrical movies by pushing their own slate into cinemas to maximize IP value before streaming. Long/Contrarian play. Theaters are starved for content volume; a Netflix-owned studio system committed to theatrical releases adds a massive new supplier of "high quality films" to the box office. Netflix management changes strategy post-acquisition and reverts to day-and-date streaming releases.
Up Next
This Bloomberg Markets video, published February 19, 2026, features Ted Sarandos discussing NFLX, WBD, PARA, AMC, CNK. 4 trade ideas extracted by AI with direction and confidence scoring.