Netflix co-CEOs on speculation streamer could buy WBD’s studio, streaming assets

Wednesday has been Netflix’s most popular series in recent months

Netflix co-CEOs Greg Peters and Ted Sarandos have played down, but not dismissed, rumours tying the streamer to a potential bid to acquire Warner Bros Discovery (WBD)’s studio and streaming assets.

During the streamer’s third-quarter earnings call on Tuesday, the executives were asked to address industry chatter after WBD earlier in the day announced it was reviewing “strategic options” after receiving “unsolicited interest” from “multiple” parties about acquiring all or parts of the company.

“It’s true that historically, we’ve been more builders than buyers, and we think we have plenty of runway for growth without fundamentally changing that playbook. Nothing is a must-have for us to meet the goals we have for the business,” said Sarandos.

“But as we wrote in the [shareholder] letter, we focus on profitable growth and reinvesting in our business, both organically and through selective M&A. And when it comes to M&A opportunities, we look at them – and we look at all of them – and we apply the same framework and lens.”

WBD’s announcement comes amid reports that Paramount is making an aggressive acquisition play. According to reports, the David Ellison-led company offered to acquire the entirety of WBD for around US$20 per share, and then improved that offer to US$24 per share, though both bids were rejected.

WBD is in the process of splitting into two companies, with one (Warner Bros) housing the studio and streaming assets including HBO, HBO Max, Warner Bros Television and Warner Bros Motion Picture Group, while the other (Discovery Global) will comprise the linear networks and several other assets, including Discovery+.

Paramount’s bid to acquire all of WBD would pre-empt its split into two, and potentially rule out streaming players like Netflix and Apple, which have repeatedly said they have no interest in owning legacy media assets.

Sarandos reiterated those sentiments during the earnings call, saying: “We’ve been very clear in the past that we have no interest in owning legacy media networks, so there is no change there.” He did not, however, make mention of WBD’s studio and streaming assets, noting simply that “we believe we can be, and we will be, choosy.”

Peters added that mega-mergers, including Disney/Fox, Amazon/MGM, Time Warner/AT&T and Discovery/WarnerMedia, rarely have a transformative impact on the businesses involved. The prospect of a competitor scaling up through a merger is not a concern to Netflix, he said.

“None of those mergers [represented] a fundamental shift in the competitive landscape, and we have seen a wide range of outcomes from such mergers. So watching some of our competitors potentially get bigger via M&A does not change… our view on the competitive landscape,” he said.

It remains unclear who WBD was referring to when it said “multiple bidders,” though CNBC’s David Faber reported that Netflix and Comcast are among the interested parties.

Sarandos and Peter’s comments came after Netflix reported its third-quarter earnings, with revenue growing 17% year-on-year to US$11.5bn.

Its quarterly revenue total was in line with analyst expectations, but operating income was below forecasts as a result of a US$619m expense related to a dispute with Brazilian tax authorities.

Operating income was still up by 12% year-on-year to US$3.2bn, but shares fell around 6.5% in after-hours trading. When excluding that expense, Netflix said it would have exceeded operating margin forecasts, adding that it does not expect the dispute to have a material impact on its future results.

By region, revenue in the US and Canada grew 17% to US$5.01bn, while Europe, Middle East and Africa was up 18% to US$3.7bn, Latin America climbed 10% to US$1.37bn and Asia Pacific rose 21% to US$1.37bn.

Netflix highlighted its growing share of viewership in the US and UK over the past three years. According to Nielsen data cited by the streamer, its share of TV time was 8.6% in Q3 2024, versus 7.5% in Q4 of 2022. In the UK, its share of TV viewership grew to 9.4% in the most recent quarter, according to Barb data, up from 7.7%.

On the series side, its most-watched titles in Q3 included season two of Wednesday (114 million views), season two of My Life with the Walter Boys (36 million), Japanese series Alice in Borderland (20 million) and the true crime docuseries Amy Bradley Is Missing (35 million). Netflix calculates a ‘view’ as the total hours viewed divided by the runtime of the title. Its top movies in Q3 included The Thursday Murder Club starring Helen Mirren and Pierce Brosnan (61 million) and My Oxford Year (81 million).

Netflix also streamed the Canelo vs. Crawford match, which it claimed is the “most-viewed” men’s championship boxing match this century with 41 million viewers.