Netflix co-CEO Ted Sarandos has finally opened up about why the streaming giant walked away from buying Warner Bros. Discovery, and the reason comes down to one thing: money. Sarandos made it clear that politics, regulatory pressure, or any other outside noise had nothing to do with their decision.
The entertainment world was shocked on February 26 when Netflix announced it would not match Paramount Skydance’s higher bid for Warner Bros. Discovery (WBD). Many thought Netflix would fight until the end. But Sarandos, in his first detailed interview since dropping out, told Bloomberg that the company had a strict price limit from the very beginning. He called it a “very tight range” they were willing to pay, and they refused to go beyond it .
“We knew right away, when we got the notice on Thursday that they had a superior offer and the details of that deal,” Sarandos said. “We knew exactly what we were gonna do” . The original deal, struck in December, had Netflix buying WBD’s studio and HBO assets for $27.75 per share. When Paramount came back with a $31 per share offer, backed by a massive $111 billion total package, Netflix simply said no .
The ‘Unusual and Irrational’ Competing Bid
Sarandos did not hold back when describing Paramount’s winning bid, which is being financed by Larry Ellison (co-founder of Oracle) and led by his son, Paramount CEO David Ellison. He labeled the offer as “unusual” and “irrational” .
He explained that to make the numbers work, the new combined company would have to cut costs aggressively. According to Sarandos, lenders are being told to expect $16 billion in cost cuts over the next 18 months. These cuts would hit the very heart of the entertainment business.
“It would be less production, less people working,” Sarandos warned. “I’m confident in our future that we’re not impacted by all that. In fact, maybe it’s to our advantage. But I hope I’m wrong for the sake of the industry” .
It Was Always About the Price, Not Politics
One of the biggest rumors swirling around the failed deal was that political pressure—specifically from Donald Trump and Republican lawmakers—played a role in Netflix’s exit. There were reports of a Department of Justice investigation and concerns about who would control news outlets like CNN.
Sarandos shut those rumors down completely. He confirmed that Netflix was under regulatory review, but called it “completely normal.” He emphasized that they were working with around 50 regulatory bodies worldwide, and the process was going as expected .
“The president stayed completely neutral on this,” Sarandos stated. “The DOJ was doing what they do, and they had been quite diligent” .
He admitted that there was a “growing narrative of political resistance,” but insisted that was different from actual resistance. Sarandos also pointed out that once people realized Netflix’s deal did not include buying CNN, the political noise died down significantly. “Once it was clear that we weren’t in the CNN business, it was a lot less interesting,” he said .
Sarandos also addressed the suggestion that he was in Washington D.C. on the day Netflix pulled out to get a message from regulators. He clarified that the meeting with the DOJ had been scheduled weeks earlier, was productive, and had nothing to do with the timing of the announcement .
Walking Away with Billions and Investor Cheers
While losing the bidding war might seem like a failure, Netflix investors saw it as a massive win. The company’s stock jumped more than 10% the day after they announced they were stepping back . This surge erased the losses the stock had seen since the deal was first announced in December.
Why? Because investors love discipline. They were worried Netflix was breaking its usual rule of only buying when it makes perfect financial sense. By walking away rather than overpaying, Netflix proved it wasn’t desperate.
On top of the stock jump, Netflix is also walking away with a hefty paycheck. Because Warner Bros. broke their original agreement with Netflix to accept Paramount’s offer, they have to pay a $2.8 billion breakup fee. Paramount has reportedly agreed to cover that cost for Warner Bros. as part of their deal .
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What This Means for Hollywood
The sale of Warner Bros. to Paramount will create a new media giant, combining massive film libraries, studios, and streaming services like HBO Max and Paramount+. It will also put news outlets CNN and CBS under the same roof, which has raised red flags for many antitrust regulators and lawmakers .
Democratic senators like Elizabeth Warren have already called the potential merger an “antitrust disaster” . The deal still needs approval from regulators, and it is expected to face tough scrutiny, especially in California .
As for Netflix, they are moving on. Sarandos noted that the process of trying to buy Warner Bros. opened up new conversations with theater owners, which could lead to more Netflix movies getting big screen releases in the future. For example, the upcoming One Piece is set to hit theaters in the US and Japan .
But for now, Sarandos is happy with the outcome. “I still believe in all the positives. I just believed in them up to $27.75 a share,” he concluded .
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