Netflix’s Ted Sarandos on Warner Bros. Deal & Trump’s Role: “It Was Never the Case”

When Netflix Co-CEO Ted Sarandos left the White House on Feb. 26, journalists tracking the streamer’s bid to buy Warner Bros.’ storied movie and TV studios, along with HBO Max, scoured photographs capturing his every expression, from the slightest hint of defeat to a smile. He looked like the cat who ate the canary.

That interpretation isn’t so far off the mark, according to the first interview Sarandos has given, to Bloomberg News, since Netflix unveiled that it was pulling out of its $82.7 billion proposed deal minutes after Sarandos drove away from 1,600 Pennsylvania Ave., rather than try to match a sweetened bid submitted by David Ellison’s Paramount-Skydance, valued at $111 billion. That includes taking on more than $95 million in debt, making it the largest leveraged buyout in history in a move that could disrupt Hollywood to its core and result in massive layoffs.

A Deal That Wasn’t About CNN

Much of the speculation surrounding the failed acquisition centered on the potential influence of former President Donald Trump, particularly regarding CNN, a Warner Bros. Discovery property. Trump has publicly expressed interest in the media landscape and many assumed he would weigh in on the deal. However, Sarandos revealed that Trump’s involvement was less direct than anticipated. “From the beginning of this, I knew there was a very sexy idea that he was going to produce the call. It was never the case. It was very clear from our first discussion that he never intended that to be the case,” Sarandos said. The Netflix CEO explained that once it became clear Netflix wasn’t interested in acquiring CNN specifically, Trump’s interest waned. “Once it was clear that we weren’t in the CNN business, it was a lot less interesting. He didn’t care that much more about our deal.”

The political dimension extended beyond Trump, with concerns raised about the influence of political pressure on the bidding process. Sarandos pointedly stated that it was “cheaper to make noise than it is to actually raise your bid,” suggesting that Paramount’s strategy involved leveraging political connections to gain an advantage. This echoes concerns raised during Sarandos’s recent testimony before a Senate subcommittee regarding the proposed acquisition, as reported by Deadline. During that hearing, Senator Cory Booker (D-NJ) questioned Sarandos about a November 24th meeting with President Trump, just weeks before the deal was announced.

Navigating Political Scrutiny and Board Concerns

Sarandos too addressed the controversy surrounding Susan Rice, a Netflix board member and former Obama administration official, who faced criticism from Trump for her political views. He emphasized that he doesn’t expect or want board members to engage in political commentary, particularly during a sensitive deal. However, he also defended Rice’s right to speak freely and stated he never considered removing her from the board. “I don’t want or expect our board members to be out talking about politics ever, let alone in the middle of a deal, but they do have the right to speak, and she wasn’t speaking for Netflix,” he said.

A Shift in Theatrical Dynamics

Netflix’s approach to theatrical releases has long been a point of contention within the industry. Traditionally, the streamer has favored limited theatrical runs, often coinciding with streaming premieres. However, Sarandos indicated a willingness to adapt, stating that Netflix would have committed to a 45-day exclusive theatrical window for Warner Bros. Films if the acquisition had gone through. This represents a significant shift, particularly given that many studios have shortened theatrical windows since the pandemic, with some releases receiving as little as three weekends (17 days) in cinemas.

Unexpected Dialogue with Theater Owners

Perhaps surprisingly, Sarandos highlighted a positive outcome of the bidding process: improved communication with theater owners. “One thing that’s been great about it is getting to know and having open dialogue with the theater owners. I really didn’t have much reason to before,” he said. He suggested that this newfound collaboration could lead to innovative partnerships, citing the successful theatrical releases of Stranger Things and KPop Demon Hunters as examples. The upcoming theatrical release of One Piece in the U.S. And Japan further demonstrates this evolving relationship. Sarandos even hinted at the possibility of Netflix acquiring theaters, given its financial resources.

Ellison’s Paramount: “Unusual, Irrational”

Sarandos didn’t mince words when describing the bidding war with Paramount, led by David Ellison. “Unusual, yeah, unusual, irrational, whatever words you want to use in that,” he said. He acknowledged the potential advantages for Netflix in the wake of the failed acquisition, but also expressed hope that the industry as a whole would benefit from a stable outcome. “It’ll be fascinating to observe the next steps. I have been on the record a lot in the last two weeks talking about what I think the future looks like. 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.”

Paramount’s Victory and Scream 7’s Success

The victory wasn’t solely a financial one for Ellison and his team at Paramount. The studio celebrated a major box office win with Scream 7, which opened over the Feb. 28-March 1 weekend to a record-shattering $64 million domestically and over $100 million globally. Variety reports that Spyglass fully produced the slasher pic, with Paramount contributing half of the budget. This success underscores the strength of Paramount’s distribution and marketing capabilities, which played a crucial role in securing the Warner Bros. Deal.

What’s Next for Warner Bros. Discovery and Paramount?

The immediate future for Warner Bros. Discovery remains uncertain. The company will now demand to navigate a complex integration with Paramount-Skydance, which is expected to involve significant restructuring and potential layoffs. The deal’s completion hinges on regulatory approval, which could face scrutiny given the combined entity’s size and market power. For Netflix, the focus will return to its core streaming business and continued investment in original content. Sarandos’s comments suggest a willingness to explore new partnerships and adapt to the evolving landscape of the entertainment industry, potentially forging a more collaborative relationship with theatrical exhibitors.