Ted Sarandos and Greg Peters, the co-CEOs of Netflix, issued a memo to staffers that conveyed their belief that the company’s deal to buy Warner Bros. and HBO Max will withstand a counterattack by David Ellison’s Paramount Skydance and will clear regulatory hurdles.
Netflix’s megadeal to buy Warner Bros. studios, HBO and HBO Max, with an enterprise value of $82.7 billion, was announced on Dec. 5. Three days later, Paramount Skydance went hostile, with Ellison announcing that the company was taking its $30/share offer for all of WBD directly to shareholders. Paramount’s current offer has a $108.4 billion enterprise value.
Regarding Paramount’s hostile bid, Sarandos and Peters, echoing comments they have made previously, said in the memo to employees, “It was entirely expected. But, we have a solid deal in place. It’s great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry. We’re confident we’ll get it over the finish line — and we’re genuinely excited about what’s ahead.”
The memo to Netflix staff was disclosed in an SEC filing Monday. The memo was released on Netflix’s Take 5 blog, which “aims to give employees clarity and understanding around strategic bets/issues, and a heads up on important news in roughly a five-minute read. Internal only,” per the filing.
In a Q&A in the note to employees, Sarandos and Peters answered this question: Some feel this is the end of Hollywood. What’s our response to that? The co-CEOs wrote: “This is something that we’ve heard for a long time — including when we started the streaming business. Our stance then and now is the same—we see this as a win for the entertainment industry, not the end of it. This deal is about growth: Warner Bros. brings businesses and capabilities we don’t have, so there’s no overlap or studio closures. We’re strengthening one of Hollywood’s most iconic studios, supporting jobs, and ensuring a healthy future for film and TV production.”
The two CEOs reiterated that they feel “confident” that Netflix will get the regulatory approvals that are needed to close the WB deal, as well as their pledge to keep Warner Bros. movies in theaters.
“Theatrical is an important part of [the Warner Bros.] business and legacy, and we don’t want to change what makes Warner Bros. so valuable. If this deal had happened two years ago, hits like ‘Minecraft’ and ‘Superman’ would still have premiered on the big screen as they did — and that’s how we plan to keep it,” according to the memo. “We haven’t prioritized theatrical in the past because that wasn’t our business at Netflix. When this deal closes, we will be in that business.”
Looking forward, the co-CEOs wrote, “We’ve got a small but mighty team of experts working on this so the rest of us can stay focused on the big 2026 ambitions we’ve established for our business,” Sarandos and Peters write. “We’ve got huge potential still ahead of us — even before we factor in Warner Bros. — so our focus should remain on realizing that potential based on our organic growth. We know that’s easier said than done with all the headlines and speculation, but continuing to deliver for our members is the best thing we can focus on.”
Read the full memo from Sarandos and Peters:
OUR DEAL WITH WARNER BROS
By: Greg Peters and Ted Sarandos
As news around our deal with Warner Bros. continued this week, we wanted to keep you as informed as we can. Our position hasn’t changed: we strongly believe that Netflix and Warner Bros. joining forces will offer consumers more choice and value, allow the creative community to reach even more audiences with our combined distribution, and fuel our long-term growth. We made this deal because their deep portfolio of iconic franchises, expansive library, and strong studio capabilities will complement—not duplicate—our existing business.
This is going to be a complex process over the next year or so and there’s a lot we won’t be able to share, but we did want to give you our thoughts on some of the most pressing questions we’ve heard since we connected last week.
How do we feel about Paramount’s hostile bid? It was entirely expected. But, we have a solid deal in place. It’s great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry. We’re confident we’ll get it over the finish line—and we’re genuinely excited about what’s ahead.
Are we confident regulators will approve? We believe in this deal—in the value it creates— and we’re confident we’ll get the approvals we need to make it happen. The fundamentals are clear: this deal is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth. Also, if you look at it through the lens of Nielsen data, even after combining with Warner Bros., our view share would only move from 8% to 9% in the US—still well behind YouTube (13%) and a potential Paramount/WBD combination (14%). We believe the facts speak for themselves, and we’re fully prepared to put ourselves in a strong position for approval.
Will we preserve theatrical releases as part of WBD’s distribution model? Yes—we’re fully committed to releasing Warner Bros. movies in theaters, just as they do today. Theatrical is an important part of their business and legacy, and we don’t want to change what makes Warner Bros. so valuable. If this deal had happened two years ago, hits like Minecraft and Superman would still have premiered on the big screen as they did—and that’s how we plan to keep it. We haven’t prioritized theatrical in the past because that wasn’t our business at Netflix. When this deal closes, we will be in that business.
Some feel this is the end of Hollywood. What’s our response to that? This is something that we’ve heard for a long time—including when we started the streaming business. Our stance then and now is the same—we see this as a win for the entertainment industry, not the end of it. This deal is about growth: Warner Bros. brings businesses and capabilities we don’t have, so there’s no overlap or studio closures. We’re strengthening one of Hollywood’s most iconic studios, supporting jobs, and ensuring a healthy future for film and TV production.
What’s next? We’ve got a small but mighty team of experts working on this so the rest of us can stay focused on the big 2026 ambitions we’ve established for our business. We’ve got huge potential still ahead of us—even before we factor in Warner Bros.—so our focus should remain on realizing that potential based on our organic growth. We know that’s easier said than done with all the headlines and speculation, but continuing to deliver for our members is the best thing we can focus on.
Where is the best place to follow along? As a reminder, Take 5 is for employees only. We’ve launched a public site as our source of truth for external audiences—which will be updated further—and it’s a resource you can share with friends and family who might have their own questions. You can also listen to our UBS webcast from earlier this week.
-Greg and Ted
