Paramount “did a very nice job of creating a very loud narrative of a regulatory challenge that didn’t exist” around Netflix‘s deal for Warner Bros, according to Ted Sarandos.
In an interview with Politico today, the Netflix co-CEO addressed the political dynamics of the Warner Bros. Discovery (WBD) auction, which ultimately ended with Paramount paying $31 a share for the HBO studio, totaling $111B.
“I can’t name a transaction that was similar to this that has ever been blocked in history,” Sarandos said of Netflix’s initial $27.75 a share deal for WBD.
“We did not have duplicated assets. We did have a market concentration issue in the marketplace that we operate in, and I think that’s the feedback I was getting back from the DOJ and from regulators in general, which was, they understood that, but I do think that Paramount did a very nice job of creating a very loud narrative of a regulatory challenge that didn’t exist.”
Politico asked about the impact of Netflix board member and Democrat Susan Rice’s comments around some corporations’ actions in relation to President Donald Trump.
Rice had claimed some companies would face corporate accountability if the Democrats return to power over perceptions they had acted in “narrow self-interest” and decided to “take a knee” to curry favor with Trump, who demanded the former U.S. ambassador to the United Nations and national security adviser be removed from the Netflix board.
“I think it complicated the narrative, not the actual outcomes,” replied Sarandos. “I think for us it was always a business transaction, was always a well-regulated process in the U.S.”
“The Department of Justice was handling it; everything was moving through,” he added. “We were very confident we did not have a regulatory issue. Why would that be? It’s because it was very much a vertical transaction.”
“A more creative relationship with exhibitions around the world”
Sarandos once again claimed Netflix would have supported theatrical windows had it been successful in its deal, despite ongoing scepticism about that narrative.
“I had a great meeting in February with the International Union of Cinemas, and the heads from all the different countries about what challenges they have, how we could be more helpful, or how they could be helpful to us too,” said Sarandos.
“I think we’ll come out of this with a much more creative relationship with exhibitions around the world. And by way of example, doing things that we haven’t done before. I don’t recommend testifying before the Senate again, but it was an interesting experience for sure.”
Elsewhere in the interview, Sarandos – who is in Brussels, Belgium, where the European Union is based – talked up Netflix’s investment in the European content market.
“One of the things to keep in mind is that we’ve become such an important part, I’d think, of the European audiovisual economy,” he said. “We’ve spent, in the last decade, over $13B in creating content in Europe. It makes us one of the leading producers and exporters of European storytelling.
“First of all, we’ve got a lot of skin in the game in Europe, obviously. We work with over 600 independent European producers. We created about 100,000 cast and crew jobs in Europe from our productions. So we talk to folks who are interested in all the elements of that — how to keep it, how to maintain it, how to grow it and how to protect it.”
We asked Netflix for more context on the $13B investment, but the streamer declined to comment.
Netflix’s next big-ticket European original is Jo Nesbø’s Detective Hole, the Nordic noir based on author Nesbø’s novel series. Other upcoming originals include The Empress Season 3, Lupin part 4 and Quasimodo.
Sarandos is meeting with several regulators on his trip to Europe. He claimed Netflix’s “commitment to European production is unique in the world,” as he sought to address how the streamer is seen by the industry in the continent.
It was “Both in our original production but also in our investment in second-rights windows that we pre-invest in films that compel production,” he added.
“Tens of millions of dollars’ worth of film production is compelled by our licensing agreements as well beyond our original production. And the fact that we work with local European producers on these projects — I think there’s a misconception that we don’t.”
Sarandos also claimed Netflix’s near-deal for Warner Bros. had highlighted where policymakers were underestimating YouTube as a competitor to traditional media businesses.
“One of the things that we saw in recent months with the Warner Brothers transaction is a real deep misunderstanding about what YouTube is and isn’t,” he said.
“YouTube is a straightforward direct competitor for television, either a local broadcaster or a streamer like Netflix. The connected television market is a zero-sum screen, so whichever one you choose, that’s what you’re watching tonight.
“You monetize through subscription or advertising or both, but at the end of the day, it’s that choosing to engage in how you give them and how, and how that programming is monetized is a very competitive landscape and it includes YouTube.”
Sarandos said choosing to watch YouTube content was “at the expense of an RTL or Netflix,” adding: “I think in this case it’s one of these things where recognizing and understanding that YouTube is in the same exact game that we are.”
