According to Fortune, Netflix co-CEO Greg Peters defended the company’s pursuit of most of Warner Bros. Discovery’s assets for $27.75 per share, a bid chosen over Paramount’s higher $30-per-share offer for the whole company. Since mid-October, when Netflix was worth over $500 billion, its stock has fallen from $124 to around $95, wiping its market cap down to about $437 billion as investors voted against the deal. Peters, speaking to CNBC, dismissed concerns about Netflix’s growth multiple and integration challenges, calling the opportunity “irresponsible” to pass up. He and co-CEO Ted Sarandos are aligned, promising to maintain Warner’s theatrical releases and its century-old library. Warner Bros. Discovery’s board chair, Samuel Di Piazza Jr., favored Netflix’s “compelling” cash-heavy offer over Paramount’s financing, which relied on uncertain equity from Larry Ellison. Peters acknowledged a probable 12 to 18-month regulatory review but expressed confidence, arguing the combined entity would still trail YouTube and Disney in TV view share.
The Investor Freakout
Here’s the thing: investors aren’t just nervous, they’re actively punishing the stock. A $60+ billion drop in market cap is a screaming vote of no confidence. And you can see why. Netflix built its entire mythos on being the agile, data-driven disruptor that didn’t need old Hollywood’s baggage. Now it’s potentially spending over $100 billion to buy the very baggage it was supposed to render obsolete. Faber’s question about Peters’ own past quote on big media mergers never working is a killer point. It looks like a total reversal. Peters’ answer—that they’re in the business of learning new things—sounds like corporate spin when your stock is in freefall. The market’s basic question is simple: if your organic growth story was so strong, why make this insanely complex, debt-laden bet?
The Strategic 180
But let’s look at what they’re actually buying. For years, Netflix dismissed theatrical windows as “outmoded.” Sarandos is now in Paris saying, oh, we just never had the mechanism before. That’s a wild about-face. Basically, they’re admitting a gaping hole in their model: they have no real film studio heritage and no serious theatrical operation. Warner Bros. gives them both overnight. It also gives them a 100-year library, which is a treasure trove for IP and a weapon in the coming war over bundled streaming services. Their argument about 75% subscriber overlap is interesting, too. It suggests they’re not buying new customers, but buying a chance to optimize and maybe even raise prices on the existing ones. It’s a consolidation play, not a growth play. And in a maturing market, maybe that’s the next logical, if unsexy, step.
The Execution Nightmare
Now for the hard part. Peters talks about figuring out integration later, “just like we figured out a bunch of stuff.” That’s… not reassuring for a deal of this scale. Integrating cultures is brutal. Netflix’s famous “culture deck” meets the entrenched, unionized world of a legacy studio? That’s a clash of titans. And then there are the regulators. Peters is already pivoting to an “economic patriotism” argument, touting 140,000 U.S. jobs. That feels like a pre-emptive plea to Washington. The skepticism from analysts like ARK’s Nicholas Grous is spot-on: Netflix has a history of rapid course correction. Promising to uphold theatrical windows today doesn’t mean they will in 18 months. If they collapse that window, it could, as Grous says, be a “death blow” for the traditional movie business. So, are they saviors or destroyers? Their track record says they’ll do whatever benefits Netflix most, promises be damned.
The Bigger Picture
So why is Warner’s board taking a lower bid? Di Piazza’s comments are telling. Cash is king, and certainty is queen. Netflix’s balance sheet and clean offer beat a shaky financing plan from Paramount and Skydance, even at a lower price. In a high-interest rate world, a sure thing is worth a premium. This whole saga signals a massive shift. The streaming wars’ growth-at-all-costs phase is over. We’re now in the consolidation and profit-seeking phase. Netflix, the pioneer, is effectively saying the pure-play streaming model has limits. It needs a studio, it needs theaters, it needs legacy IP. It’s a stunning admission. Whether this turns out to be a masterstroke or a catastrophic misstep depends entirely on a execution they’ve never attempted, a regulatory fight they haven’t won, and a cultural integration that seems fraught. Buckle up.
