When Netflix co-CEO Ted Sarandos left the White House on February 26, journalists were tracking the streaming company’s bid for Warner Bros. Television. Popular film and TV studios, along with HBO Max, looked to photographs that capture his every expression, from the slightest hint of defeat to a smile. In the end, he looked like the cat that ate the canary.
That explanation isn’t far from reality, according to Sarandos’ first interview with Bloomberg News since Netflix revealed it would pull out of its proposed $82.7 billion deal minutes after Sarandos left 1600 Pennsylvania Avenue, instead trying to match David Ellison’s $111 billion sweetened offer from David Ellison’s Paramount-Skydance company. That includes taking on more than $95 million in debt, making it the largest leveraged takeover in history in a move that could cripple Hollywood to its core and lead to massive layoffs.
Many assume that Ellison’s father — Oracle founder and Trump friend Larry Ellison, who is among the world’s richest men — will always provide a life raft, even though he has already personally guaranteed more than $57 million in debt.
Many also assumed that Trump himself would ultimately be judge and jury regarding which bidder WBD went to by lobbying regulators. The one property Trump cares about most is CNN, which could have been spun off from other cable networks. Paramount wants the entire company.
“From the beginning, I knew there was a very exciting idea that he was going to make the call. That was not the case at all. It was very clear from our first discussion that he never intended it to be that way,” Sarandos said. “Once it became clear we weren’t working for CNN, it became less interesting. He didn’t care much about our deal.”
In recent days, Trump used his fiery rhetoric to demand that Netflix remove Susan Rice, a prominent Democrat and former Obama administration official, from the company’s board after suggesting that companies that capitulate to Trump — as Ellison’s Skydance company did with Paramount-owned CBS News — could regret it once Democrats are back in power. “I don’t want or expect board members to come out and talk about politics at all, let alone in the middle of a deal, but they have a right to speak, and she wasn’t speaking on behalf of Netflix,” the executive said. He said he conveyed those concerns to Rice, but said he never considered letting her go.
Netflix has come under intense scrutiny because it’s not exactly known as a team player when it comes to giving its films a traditional theatrical release. But times have changed so radically since the pandemic that Netflix told lawmakers and others that it would commit to a 45-day exclusive in theaters if it owned Warner Bros.’ (Last year, at least half of all studio releases had a shorter window, with the shortest being three weekends, or 17 days.)
One major bonus: Sarandos says that going through the process has opened up a level of dialogue with theater operators that he hadn’t previously enjoyed (the streamer can even buy theaters if he wants, because he has the money). “One of the great things about this is getting to know the theater owners and having an open dialogue with them. I’ve never had much of a reason to do that before,” he said. “We’ve figured out some creative things we can do together, as you’ve seen Strange things and Demon hunters in kpop. We have one piece In theaters next week in the US and Japan. I think we’ll find a bunch of great things to do together moving forward. I can see that we are doing things that we have never done before.
He also agreed that “extraordinary” is one word to describe Ellison.
“Unusual, yes, extraordinary, irrational, whatever words you want to use for that,” he said. “It will be great to see the next steps. I’ve talked a lot in the last couple of weeks about what I think the future will look like. I’m confident in our future that we won’t be affected by all of this. In fact, it may be to our advantage. But I hope I’m wrong for the good of the industry.”
Beating Netflix wasn’t the only major event for the young Ellison and the industry veterans he hired at Paramount, including Motion Group co-presidents Josh Greenstein and Dana Goldberg, whose team successfully opened a marketing and distribution division Screaming 3 Over the weekend of February 28 to March 1 it grossed a record $64 million domestically and north of $100 million worldwide. Spyglass produced the entire slasher picture, with Paramount paying half the budget.
