Hollywood moguls once dismissed the outsize ambitions of Netflix\u2019s executives. <\/p>\n
\u201cIs the Albanian army going to take over the world?\u201d former Time Warner Chairman Jeff Bewkes asked a reporter 15 years ago<\/a>. \u201cI don\u2019t think so.\u201d <\/p>\n Think again. On Friday, Netflix co-Chief Executive Ted Sarandos pulled off an audacious $82-billion deal<\/a> to buy much of Bewkes\u2019 old haunts: the Warner Bros. film and TV studios in Burbank, and HBO and the HBO Max streaming service in Culver City. <\/p>\n \u201cThis is a rare opportunity,\u201d Sarandos said in an investor call. \u201cIt\u2019s going to help us achieve our mission to entertain the world and to bring people together through great stories. We\u2019ve built a great business, and to do that, we\u2019ve had to be bold and continue to evolve.\u201d<\/p>\n If the takeover is approved \u2014 it could face a raft of legal and regulatory challenges \u2014 Netflix would gain ownership of such classics as \u201cCasablanca\u201d and \u201cGoonies\u201d and popular characters including Batman, Scooby-Doo, Dirty Harry and Harry Potter.<\/p>\n The acquisition represents a moment of triumph for the brash Sarandos, who has gone from Hollywood gate-crasher to the ultimate power broker. <\/p>\n \u201cThere seems to be no ceiling of opportunity for Ted Sarandos,\u201d said Tom Nunan, a former studio and network executive. \u201cHe\u2019s the king of Hollywood.\u201d <\/p>\n Netflix\u2019s victory in the auction for Warner Bros. stunned many in Hollywood who figured Paramount \u2014 whose bid was backed by the one of the world\u2019s wealthiest men, Larry Ellison \u2014 had a lock on the prized Warner assets. <\/p>\n Even Netflix\u2019s brass downplayed their merger ambitions<\/a> as recently as two months ago. Co-Chief Executive Greg Peters shrugged off any interest at a Bloomberg conference, saying: \u201cWe come from a deep heritage of builders rather than buyers.\u201d <\/p>\n But the streaming giant\u2019s dominant market position and strong balance sheet allowed it to assemble a largely cash bid that wowed Warner Bros. Discovery\u2019s board, which voted unanimously in favor. What\u2019s more, Netflix agreed to absorb more than $10 billion of Warner Bros.\u2019 debt, bringing the deal\u2019s total value to $82.7 billion.<\/p>\n Warner shareholders and U.S. and foreign regulators still must approve Netflix\u2019s takeover. Netflix \u2014 which is based in Los Gatos but has a large presence in Hollywood \u2014 said it expects the deal will close within a year to 18 months. <\/p>\n Netflix, however, already is facing stiff opposition <\/a>from cinema chains, lawmakers, prominent creatives and labor unions. The Writers Guild of America said the deal should be blocked.<\/p>\n \u201cThe world\u2019s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent,\u201d the WGA said.<\/p>\n A career of defying convention<\/p>\n If it succeeds, the takeover would be a coup for Sarandos, the company\u2019s often controversial co-CEO who has been responsible for Netflix\u2019s content operations since 2000. Until recently, he was seen as a disruptor who upended the industry\u2019s long-standing business models, especially its reliance on the big screen.<\/p>\n It\u2019s a remarkable trajectory for the 61-year-old Phoenix native and movie buff, who once clerked in a strip mall video store, joining Netflix when it was a scrappy Silicon Valley startup distributing DVDs through the mail in red envelopes. <\/p>\n Company co-founder Reed Hastings was impressed by Sarandos after he struck a first-of-its-kind revenue-sharing deal with Warner Bros. as an executive at West Coast Video\/Video City retail chain.<\/p>\n Sarandos has been in charge of Netflix\u2019s content operations ever since.<\/p>\n One of five children, he\u2019s the son of an electrician and a stay-at-home mom who left the TV on all day. <\/p>\n While working at the video store, Sarandos <\/a>earned a reputation for giving great movie recommendations to customers based on what they liked to watch. In many ways, he was a human version of Netflix\u2019s now famous recommendation algorithm. <\/p>\n Sarandos spent his first three years at Netflix working out of his bedroom <\/a>in Los Angeles. Hastings and Sarandos\u2019 enterprise was largely responsible for bankrupting the then-dominant video rental chain, Blockbuster. <\/p>\n His knack for knowing what audiences want was instrumental in Sarandos\u2019 ascent at Netflix and Hollywood: Netflix now has more than 301 million subscribers, and it could grow even more.<\/p>\n Analysts estimate the acquisition could add an additional 100 million customers <\/a>to the streaming service \u2014 a bounty that is expected to draw the attention of antitrust regulators.<\/p>\n Over time, the company shifted to streaming licensed TV and films, but as studios started to pull away from those deals, Netflix began its foray into original content. <\/p>\n Again, Netflix wasn\u2019t taken too seriously at first. Sarandos would get TV show scripts with signs of rejection \u2014 coffee stains and smudged fingerprints \u2014 but his gamble on buying the rights to David Fincher\u2019s political thriller, \u201cHouse of Cards,\u201d starring Kevin Spacey and Robin Wright, in 2011 changed that.<\/p>\n Sarandos walked into Fincher\u2019s office and offered him a provocative deal: Netflix would commit to the first two seasons of \u201cHouse of Cards\u201d without seeing a pilot for $100 million<\/a>. <\/p>\n \u201cThere were 100 reasons not to do this with Netflix,\u201d Sarandos told The Times in 2013<\/a>. \u201cWe had to give them one great reason to do it with Netflix.\u201d<\/p>\n Sarandos has made a career out of defying convention.<\/p>\n Under his leadership, Netflix released episodes to shows all at once, allowing people to binge watch an entire season. The platform greenlighted full seasons of shows even before they began, and older series like \u201cFriends\u201d and \u201cThe Office\u201d found new audiences years after they ended on network television. <\/p>\n He made bets on series that other traditional studios passed on, including the popular sci-fi show \u201cStranger Things,\u201d which would become a global hit with its own universe of characters, like \u201cStar Wars.\u201d <\/p>\n Some studios were hesitant to give the show\u2019s creators, Matt and Ross Duffer, first-time showrunners, the reins. Typically, Netflix and Sarandos thought differently.<\/p>\n \u201cThey read it, they got the project, and they wanted me and Ross to be involved as showrunners and to direct, and that completely changed our lives,\u201d said Matt Duffer on stage at the L.A. premiere of the final season of \u201cStranger Things\u201d<\/a> in Hollywood this month. <\/p>\n \u201cTed made that decision all the way back then, 2015, and that\u2019s why we\u2019re here today,\u201d he said. <\/p>\n Over time, Netflix became a place where talent wanted to pitch their shows. <\/p>\n \u201cThe goal is to become HBO faster than HBO can become us,\u201d Sarandos told GQ in 2013. <\/p>\n Soon, Sarandos might be in charge of HBO. <\/p>\n Netflix expanded its reach globally, creating a production pipeline abroad. Its biggest international hits include 2021 Korean language series \u201cSquid Game,\u201d Netflix\u2019s most popular show of all time, with its first season generating 265.2 million views in its first three months. <\/p>\n But as Netflix\u2019s strategy changed the Hollywood landscape, it also angered theater owners and competitors who were upset that the streamer was playing by different rules that challenged long-standing practices in the entertainment industry. <\/p>\n Sarandos in particular has taken direct aim at the traditional practice of releasing movies in theaters first \u2014 and keeping them there for months before making them available for home viewing.<\/p>\n Netflix generally releases movies in theaters only for short periods in order to appeal to fans or qualify for awards. They appear on its platform shortly after they debut in theaters.<\/p>\n Sarandos was promoted <\/a>from chief content officer to co-CEO in 2020, running the company with Hastings, who had previously served as Netflix\u2019s CEO. <\/p>\n The duo faced their biggest challenge in 2022, when Netflix\u2019s subscriber numbers plunged<\/a> by 200,000 subscribers in its first quarter, the first decline in more than a decade. <\/p>\n Analysts feared that the streaming revolution was over and Netflix had reached a ceiling to its growth. <\/p>\n But Netflix was able to find new revenue streams by cracking down on password sharing and entering new areas of business it previously overlooked, including advertising and live events like sports, including NFL football.<\/p>\n In 2023, Hastings stepped down from his role to be executive chairman, and Peters, chief operating officer, was named<\/a> to the co-CEO role.<\/p>\n Today, Netflix is widely heralded as the winner of the streaming wars <\/a>years after many rivals tried to enter into the space, putting the company in an ideal position to make a significant cash and stock bid for the Warner Bros. Discovery assets it was seeking. <\/p>\n Unlike many of its competitors, Netflix is profitable \u2014 the company generated $2.5 billion in net income in the third quarter, up 8% from a year earlier. <\/p>\n Netflix has offered Warner Bros. Discovery shareholders $23.25 in cash and $4.50 of Netflix stock for each share. In September, before Paramount started the bidding, Warner Bros. was trading around $12.<\/p>\n \u201cThese assets are more valuable in our business model, and our business model is more valuable with these assets,\u201d Sarandos said in a call with investors on Friday. <\/p>\n If the deal is approved, Netflix would be the third owner of Warner Bros. and HBO in a decade. On the call, Peters addressed his earlier critique that most big media mergers fail.<\/p>\n \u201cWe understand these assets that we\u2019re buying,\u201d Peters told investors on Friday. \u201cThings that are critical in Warner Bros. are key businesses that we operate in, and we understand a lot of times, the acquiring company, it was a legacy, non-growth business that was looking for a lifeline. That doesn\u2019t apply to us. We\u2019ve got a healthy, growing business.\u201d <\/p>\n Sarandos expressed confidence the deal would go through. <\/p>\n \u201cThis deal is pro-consumer, pro-innovation, pro-worker, pro-creator, pro-growth,\u201d Sarandos told investors. \u201cOur plans here are to work really closely with all the appropriate governments and regulators, but really confident that we\u2019re going to get all the necessary approvals that we need.\u201d<\/p>\n Sarandos is one of Hollywood\u2019s most well-compensated CEOs, with a package that was valued at $61.9 million in 2024<\/a>. <\/p>\n Long seen as friendly to talent, he has weathered some controversies over the years. <\/p>\n During dual strikes in 2023, writers and actors complained bitterly about how Netflix was compensating them for their work on streaming shows.<\/p>\n