2025-12-10 07:59:15
I'm old enough to remember when the head of Netflix wasn't just downplaying the importance of movie theaters to the industry, he was eviscerating the entire concept as "outdated". That is to say, I'm at least eight months old.
Yes, not even a year ago, Ted Sarandos was giving very public comments on stage to that effect. To the point where my headline in writing up his remarks was: Ted Sarandos Screams "Fire!" at the Movie Theaters. The comments were especially noteworthy because he was also in the news at the time being floated as a potential external candidate for the Disney CEO role with Bob Iger on the retirement clock. Sarandos was quick to shoot down such rumors, but what else was he gonna say? Well, as it turns out he could say things about the theatrical business that make it clear he could not possibly run Disney with such a stance. As I wrote at the time:
On the other hand, there's no way you could dare say such a thing and have a job running any major movie studio – yes, even in 2025 – besides Netflix...
Forget the CEO job of Disney, Sarandos may end up as auteur enemy number one with these comments.
I think it's safe to say that he's not getting the Disney job. But his company just made a bid in which he'd be in charge of the only studio with a higher share of the theatrical market right now. Awkward.
But also fairly in line with Netflix's history of proclaiming very loudly that they'd never do something, only to turn around and do it. This is exactly why I predicted just over a year ago that Netflix's next backtrack would be on their theatrical stance. And here we are.
At the same time, I didn't expect us to get here exactly this way! That is to say, Netflix seems to be backtracking on their theatrical stance not on their own, but by backing into a new one: that of the company they're acquiring.
Reading all the reports about the deal, it almost seems as if Sarandos decided Netflix had a unique opportunity here with Warner Bros and he was going to do it no matter the cost. Well, maybe not no matter the cost – we may see that soon enough depending on how high Paramount is willing to go to try to snatch victory from the jaws of defeat! – but no matter what stance he had to backtrack on. And now he's flipping that script and saying that part of the rationale for the deal was getting into the businesses that Netflix has not historically been in – including theatrical distribution.
Here he was singing his very different tune at the UBS Conference yesterday:
"In this transaction, we pick up three businesses basically that we’re not currently in, meaning we have no redundancies currently, but one of them is a motion picture studio with a theatrical distribution machine. There’s been a lot of speculation what we would do with this. I think it’s important to note that all we are going to do with this is staying deeply committed to releasing those movies exactly the way they’ve released the movies today, all three of these new businesses we want to keep operating largely as they are, the theatrical business we have not talked a lot about in the past, about wanting to do it, because we’ve never been in that business. When this deal closes, we are in that business, and we’re going to do it."
Obviously, the real key to that entire statement is "redundancies" – it's the corporate code word for layoffs. Sarandos is saying that a Netflix deal would lead to far less job loss in Hollywood than a Paramount deal, where "synergies" will be key to getting costs in line. But note the wording on his specific theatrical business remarks. Clearly, there's still some wiggle room in that statement – in particular, "largely" may be doing a lot of work. But the wiggle room seems to be shrinking by the day with such proclamations by Netflix around their theatrical aims with Warner Bros. What started as "expects" has grown into "largely" – from Netflix's own press release about the deal last week:
Netflix expects to maintain Warner Bros.’ current operations and build on its strengths, including theatrical releases for films.
But actually it started before that, with leaks around the news indicating that yes, Netflix intended to keep Warner Bros in the theatrical business with this deal – at least for now. But I mean, what else was Netflix going to say? That they were acquiring Warner Bros and shutting down the theatrical arm as soon as the deal closed? Come on. There may have been literal riots in Hollywood.
This is perhaps the biggest question – amongst the many, many questions – that Netflix is going to keep getting about this deal. And that's in no small part because of the previous comments from Sarandos. Netflix isn't just battling Paramount here, they're battling Hollywood too – a place which you'd think would prefer Netflix take over one of the studios versus another studio full of "redundancies" just waiting to happen. But then again, they know David Ellison loves theatrical releases. Everyone saw Top Gun: Maverick, perhaps the most theatrical of theatrical releases this side of Christopher Nolan.1
And the reality is that right now, that one aspect may matter more to the town than anything else – even political bents. Because if Netflix removes Warner Bros from the theatrical equation, the show is over.
Again, while changing stances is nothing new for Netflix – and actually seems to be one of the keys to their continued success – the previous theatrical rhetoric is clearly coming back to bite Sarandos in the ass here. And the hostile counter-attack is certainly not going to help. Ellison is going to hammer this point home again and again. So Sarandos will need to go even more over-the-top to try to change Hollywoods' collective mind about his intentions. You're seeing it already: it's not just a commitment to seeing Warner Bros theatrical commitments through, it's now that Netflix is doing the deal in part to get into that business.
I mean, it certainly sounds like total bullshit spin. But is it?
Again, I already made the case a year ago why I believe Netflix would backtrack on this stance. As I laid out, there are a few reasons that basically boil down to: the relationship with talent, the power of marketing/halo effects, and yes, the fact that they can actually make money doing it – provided they do it smartly, which they presumably would.
It's entirely possible that something woke them up to these notions over the past year – or a few things. Maybe it was losing out on Wuthering Heights to... Warner Bros (despite offering more money). Maybe it was Greta Gerwig forcing Netflix to submit to an IMAX release for her upcoming Narnia project. Maybe it was the groundswell of support that Frankenstein saw for a bigger theatrical push. Or the notion of how much money they're – once again – leaving on the table with the Knives Out franchise. The Stranger Things finale strategy (after losing the Duffer Brothers to... Paramount). And the cherry on top may have been the success of KPop Demon Hunters. The movie that exploded at the box office weeks after it had already been on Netflix.
Clearly, there's something to be done here with movie theaters. The opportunities have kept falling on Netflix's head like one of those Looney Tunes anvils.
Something else: if Netflix truly wants to become the first $1T media company, the only thing that matters is growth. They managed to get halfway there on the back of the streaming business, and can undoubtedly push it a bit further – and certainly Warner Bros content will help! – but they need other lines of business too. It makes sense that theatrical would be one of them. Warner Bros should do between $4B - $5B in box office revenue this year. Netflix overall did about $40B last year, so it wouldn't be a massive chunk of the business, but also not nothing.
And the real key may be leveraging such distribution to create "halo effects" for their other businesses. Obviously streaming itself, but what if, say, they start to delve more into theme park-like experiences? Like, perhaps opening up giant "Netflix Houses" in the carcasses of old shopping malls? You know, the places that used to house movie theaters? Funny that!
Can cruise ships be far behind? Poop Cruise anyone?
But really, throw in toys, merchandise, etc, and you can quickly see how Disney brings in around $100B a year. Sports also drives a good chunk of that – something else Netflix has backtracked on, hard, but really it's the IP straw that stirs the whole drink. And theatrical is a key part of creating a maintaining that value. Yes, in a way I'm saying that Netflix needs to become Disney before Disney can become... you get the picture.2
All I'm saying is that it's not insane to think that Netflix may actually have changed their mind on theatrical. And if that's the case, it might not be total bullshit that they're planning to remain committed to it with Warner Bros.
Granted, I still believe the thinking will morph over time. As it should! And while Sarandos' remarks may have made the wrong kind of headlines if you want to say, buy a major movie studio in a few months, that doesn't mean he was totally wrong. The overall theatrical model actually broke a long time ago – long before COVID gave the industry a fall guy – as it has been in a state of overall decline for decades, with only jacked up ticket prices masking free-falling attendance. The situation was not tenable and streaming – yes, largely Netflix – just sped up the inevitable.
That doesn't mean theatrical is over – see: above – it means it needs to morph into a business that's appropriate for the 21st century. And Netflix, having now found religion on this topic, is uniquely suited to help usher in that reality.
The other tech players all see this too, undoubtedly because they're not drunk on the nostalgia of what once was. And so Apple and Amazon can also help guide the way here – at which point the people in Hollywood reading this are probably vomiting. But the point is to find the correct model that works, not to prop up the one that doesn't.
I know that's what Hollywood is hoping that Sarandos means with his new comments. That he will use his studio to save the theaters. But deal talking points aside, this clearly won't happen the way Hollywood hopes. Again, that doesn't mean Netflix is lying about this new stance, but it likely means they're going to figure out how to make it work on their terms. That's scary to hear too, but better than the alternative. When the alternative is a continued slow death.
In the meantime, there's almost no way this deal is getting done for at least another year, and maybe two – if it ever does. So if nothing else, obviously Netflix can't say anything to rock the current boat while it's still in the water for the foreseeable future. But even when the deal closes – if the deal closes – I suspect the status quo with Warner Bros and theaters will be in place for at least another year and maybe two depending on pipeline.
Again, if not, key Hollywood talent that has worked with Warner Bros – the Denis Villeneuves of the world – are going to take their talents elsewhere. They still might out of concern about this Netflix future, but hey, Villeneuve is also making a Bond film for Amazon. Amazon! So let's not clutch those pearls too tightly...
The bigger question may be what happens if Netflix doesn't buy Warner Bros? Do they still opt to go down the theatrical path? I still bet they do...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 And you can just ask Tom Cruise – or maybe, don't! ↩
2 But also, Netflix can't become too much like Disney, lest they start attracting the same stock multiple, which would be a huge issue for Netflix going forward – with Disney trading around 16x forward P/E versus 30x for Netflix! It still has to be all about growth. And tech. Andy making Wall Street believe they are not a traditional Hollywood player now... ↩
2025-12-09 01:12:46
Two things can be true: the exodus Apple is seeing amongst their executive ranks is largely natural, and the exodus they're seeing elsewhere in the company is largely not.
There have been a number of stories about this topic over the past week. That too is natural given the high-profile people who are leaving the company. It started with COO Jeff Williams, who pre-announced his retirement earlier this year, but it's obviously always a big deal when a "number two" leaves a company...
2025-12-07 06:22:27
At last, we've seemingly found something to unify the country. Everyone seems to hate the Netflix deal to buy Warner Bros. Republicans. Democrats. Rival studios. All of Hollywood. Even Netflix shareholders. Everyone. Well, aside from David Zaslav.
But why? There are myriad answers to that question depending on who you are – I'll get into that. But if we just take a step back and look at the bigger picture... Um, to me, Netflix sure looks like a fantastic buyer and potential owner of a major Hollywood studio.
Yes, I said it. Because yes, it's true.
Before I go further, I will disclose that I own shares of Netflix. Actually, it was the first stock I ever bought for myself right after college. I've written about this before, the year was 2004 and I felt like I could see it... Before you get too envious, I had to sell those shares – along with the second stock I bought at the time, Apple – when I went into the world of reporting. Ugh. But a few years ago, I bought more Netflix shares again. Why? Because Bill Ackman was selling them.1 I'm not kidding, it was right around the time that he was bailing. To me, that was obviously stupid and myopic. Netflix was and remains a great company. I've been writing about this notion for 15+ years. They're just built differently, certainly for an entertainment company,2 if you want to consider them that – we'll also get to that. Okay with that disclosure out of the way, let's back up a bit...
Currently in Hollywood there are widely considered to be five major studios. Each year they jockey for position, over the past couple of decades, Disney is usually out in front. And that's interesting since they're also the only studio that hasn't been bought and sold like a commodity over the past 50 years. That's the thing: Everyone is freaking out about this Warner Bros news as if it's totally out of the blue for one of these studios to be bought. They are bought all the time. And often by far more problematic buyers than Netflix. Let's just do a quick overview.
Of the remaining "Big 5", Universal and Paramount were both started in 1912. Universal was also the first one taken over thanks in no small part to the Great Depression, when their lenders had to step in. It's sort of a miracle they're still around. But you can thank Decca Records, yes, a music label in the 1950s which acquired the studio – the first such "synergy" of entertainment brands. A decade later, MCA (Music Corporation of America) acquired Decca and thus, Universal. And under the stewardship of Lew Wasserman for decades, it became a modern powerhouse.
From there, in 1990, Panasonic bought MCA/Universal – surely because Sony had bought Columbia (more on them in a minute). It didn't really work out due to the undoubted culture clash between a Japanese electronics giant and a Hollywood entertainment brand. Five years later, Seagram bought the studio. Yes, this was Edgar Bronfman Jr.'s attempt to diversify his Canadian company away from spirits. Yes, a liquor company owned a studio.
But also not for long as Seagram was merged with Vivendi – the French utility and media player. So yeah, in a decade a major Hollywood studio was swapped between the US and Japan and Canada and France. That's when GE – yes, the electric company – swooped in to buy the studio and merge it with NBC. That led to Comcast – the cable giant – coming in to buy those assets. And that's still where they reside today.
And it's why Comcast was also in the running to buy Warner Bros. Paramount + WB would become the largest studio, but it would really be about merging Peacock and HBO Max, the former of which is clearly a sub-scale streamer relative to their peers.
What started as an independent studio named "Famous Players" morphed into the Paramount powerhouse over a few decades until the famous "Paramount Decree" broke up the ability for a studio to also own and operate movie theaters in 1948. This major Supreme Court decision was only fully unwound recently and let Sony buy Alamo Drafthouse, for example. But it basically did Paramount in as a large, independent player.
By the 1960s, Gulf + Western, a industrial conglomerate focused on um, auto parts, sugar, and zinc stepped in to buy the studio. They ran it very successfully for about 30 years – so much so that they spun off the industrial business and just focused on Paramount. That was until Sumner Redstone entered the picture and used his own conglomerate – which itself started as a regional movie theater chain, National Amusements, but eventually bulked up via other acquisitions (Showtime, MTV, etc) into Viacom – to buy the studio.
It remained in that family until last year when David Ellison's Skydance famously bought it – after a long, exhausting courtship. Paramount has often been viewed as the fifth of the five studios in terms of market share in recent years, so adding Warner Bros – often in the top three, and first this year – would have been a big coup, clearly. Also Paramount+ is another of the sub-scale streamers relative to their peers. Adding HBO Max would have boosted that substantially – this is exactly why I said, and predicted, that Paramount would try to buy them.
Most people probably still think of Sony as a Japanese electronics giant (like Panasonic) even though PlayStation is now their largest business. But the movie studio now under that brand started as Columbia Pictures in 1918, with the founding Cohn family running it into the 1950s when the last member of the family passed away. The studio struggled under various management (including, at one point, selling their actual studio lot and partnering with Warner Bros on their's in Burbank, and a hostile takeover attempt by Kirk Kerkorian, the Las Vegas casino mogul who also controlled MGM – which led to an antitrust lawsuit) until the 1980s when Coca-Cola – yes, the beverage company – bought it. Why? "Synergies" of course. But it didn't last too long...
Sony, yes another Japanese electronics giant, stepped in in 1989 – arguably the height of their power – to buy Columbia (and Tri-Star). Betamax had just failed as the home video format in the face of VHS and Sony clearly wanted a way to ensure they'd be a player in entertainment. What better way than buying a major movie studio? One which they still own to this day.
And one which, famously, doesn't have its own streaming service but instead opted to do a deal with... Netflix to license their content. That includes, notably, KPop Demon Hunters – and, in a weird twist of IP fate, Spider-Man. That streaming deal is up for renewal next year and it will be fascinating to see what both sides do. Will Netflix even be allowed to do a new deal with them given the Warner Bros acquisition?
Started in 1923 by you-know-who. As noted, it's the only major studio to have not been bought and sold over the years. Disney went public in the 1940s and has been operated that way ever since. While the top shareholders have shifted over time – notably, Steve Jobs became the largest shareholder after he sold Pixar to the company in 2006 – the family still has sway. Though not nearly as much as current CEO Bob Iger. Who is on the verge of retiring – for real this time, we think.
As noted, they're the studio largely considered to be the top dog (even if they are technically behind Warner Bros this year after a sort of wild run of hits). And that's in no small part because of the acquisitions they've made – as opposed to constantly being acquired. Notably, the aforementioned Pixar, but also Marvel, Lucasfilm, and most recently another one of the studios, 20th Century Fox (now called '20th Century Studios', since Rupert Murdoch still uses the 'Fox' branding for his television channels which he kept in the deal).
Started the same year as Disney, the literal Warner brothers (mainly Jack) ran it until the 1960s (a clear decade of change for most of the studios3) when a perfect storm – namely the brothers hating each other and the studio underperforming – pushed Jack to sell to a smaller production company. A few years later, Kinney National – a, um, parking lot and funeral home company, swooped in. Once they rebranded it as Warner Communications, they actually ran it well, bulking up with other purchases like Atari (which at one point accounted for almost 70% of their profits during the video game boom) and launching MTV (later sold to Viacom after the subsequent video game crash nearly bankrupted Warner) into the 1980s.
(Note: I had originally said that they added DC Comics to the mix too, but actually the DC purchase *predated* the Warner Bros deal by about two years. Thanks Belle.)
That's when Time, the publisher, entered the picture, merging to form the still well-known but defunct brand of Time Warner. But their infamous merger with AOL, an internet dial-up service, in 2000, and the fall of brands like Time itself, began a downward spiral that led to the AT&T deal in 2018, a telecom. This was, of course, a total disaster. Certainly for HBO, but really for everyone. A pandemic didn't help but it was also just a total self-own on many fronts. Just four years later, "WarnerMedia" was spun off and merged with David Zaslav's Discovery.
In the past three years, while Zaslav has gotten paid a lot, and kept on rebranding things, the stock kept sinking right up until this deal.
As you can see, the history of the movie studios is all about M&A. In that light, it's really sort of wild to see the reaction against this Netflix deal. It's just another in a decades-long string of deals. Record companies, electronics giants, liquor companies, utilities, cable companies, telecoms, industrial conglomerates, soda companies. I mean, to reiterate, Warner Bros itself was bought by a parking lot and funeral home company at one point. And people are worried about Netflix?!
Of course, the reason why is obvious and perhaps somewhat warranted. Where as the other buyers of movie studios in the past may simply have had no idea what they were doing with a movie studio, Netflix certainly will. And the fact that their entire existence has been about upending the status quo of the industry, from Blockbuster Video on down, clearly is what has everyone in Hollywood shitting their pants.
That is to say, whereas acquirers in the past ranged from passive to incompetent, Netflix is neither. And that could be a big problem. Certainly for said status quo.
And Hollywood not only loves the status quo, the industry thrives on it. There is no greater example of an industry, perhaps outside of France, that has so much obvious bloat that could be cut to operate far more efficiently. Hollywood would say this is part of the allure and mystique of the industry. And sure, there's something to that. But not enough to continue operating as a declining industry in the 21st century.
Every week, Hollywood is up in arms about the box office results that can't hold a candle to what they looked like pre-pandemic. But always brushed aside in these numbers is how much worse they would actually look if shown relative to inflation. The Titanic is at the bottom of the ocean and everyone in Hollywood is still trying to buy a ticket. Sadly, no one else is buying tickets.
And let's not even dare look at the theater admission per capita numbers. Well, how about just a peek...
You'll note the peak, we're nearly 100 years removed from it at this point...
Streaming, much like in music, has been the saving grace in terms of keeping such content actually relevant. And Netflix is the key there. Yet the studios all look to them much like the record labels looked to Apple after iTunes saved their asses post-Napster: they wonder why they gave them the keys to the kingdom, completely missing that if they hadn't, they'd be far more screwed. Perhaps dead.
And so all of this mixed with the fact that we're entering uncharted waters yet again in the form of the Age of AI, has Hollywood shitting those pants. Everyone feels like they're going to die, but they're unclear which of the dozen causes it will be. Netflix buying Warner Bros is simply the latest in the string of calamities.
And again, it's arguably the situation that makes the most sense. Was Paramount going to save Warner Bros? Comcast? Come on. The issue, which Hollywood refuses to acknowledge, is that the theatrical business as it once was is over. Because it was invented and thrived in a completely different world. Where people couldn't play movies in their homes. And would go to movie theaters for the air conditioning. To get out of the house. To do something. These days, for better or worse, there is no shortage of something to do.
Yes, going to see a movie in a theater remains an awesome experience – provided it's a nice one, which it often is not, which is a huge problem. Instead, we have the theater chains trying to milk profits out of the remaining literally captive audience. How do we think that ends?
But what if we just add Smell-O-Vision?
There are few things I love more than seeing a great movie in a cinematic palace. But I'm a film buff. Most people are not – and by the way, they never will be unless you make movies available where they want to watch them. Which is at home, on Netflix (or the other streaming services). On one hand, this sucks. On the other, it's progress. Nearly every person on Earth can watch movies now. That they're not watching them on 100-foot screens makes them perhaps less grandiose, but no less magical.
And let's also acknowledge the other awkward truth: AI could very well make it so that anyone can make a movie. Not today, not tomorrow, but the way things are headed, at some point in the next several years. Will this ruin movies? I mean, if you're a current gatekeeper, then sure. But for the actual art form, of course not. This is not about robots making slop, it's about humans leveraging new tools to expand creation. So get your heads out of your stuck-up asses, Hollywood.
Because regardless of what I say or if this deal does or does not happen, this is all happening. At least Netflix can help bridge the divide between the old ways and the new world we're entering. Yes, they're annoying with the theatrical stance, but they were always going to backtrack on that in some ways. But not fully, because they shouldn't. Because it's silly in 2025 to think that every movie should play in a movie theater first – let alone for months at a time.
Some movies absolutely should go to theaters. And Netflix will make a lot of money leveraging that model. But they probably only need to be there for a few weeks at most. Other movies shouldn't go there at all. Perhaps they should go to Netflix first, like KPop, and then they can pop when put in theaters for special events later.
Or movies that breakout on streaming get sequels that go to theaters. And shows that are ending put their finales in theaters. Or shows that turn into movies more regularly. And vice versa! And Netflix can enable so much of this because of their platform. Leveraging such a powerful surface can drive people to actually go to movie theaters again, imagine that! There are so many ideas here that are obvious and yet completely underutilized because they're simply not the old way of doing things. And Netflix is a huge middle finger to that old way of doing things.
And that's why Hollywood is scared shitless right now. Acquisitions and antitrust? Come on – just look at who was doing these deals before. The entire industry needs to grow up and evolve if they're going to survive what's coming. And this Netflix deal offers them a path to do just that. And so they'll do everything they can to make sure it doesn't happen.
1 While some people have anti-Cathie Wood or anti-Jim Cramer portfolios, I'm a sucker for the anti-Ackman portfolio bet. It has worked well, so far, for Netflix. ↩
2 In fact, given that the stock has been hit a bit in recent months, and certainly on this news, I think I'm a buyer again. (This is not investment advice.) My only reluctance is that this deal really may never be completed, for reasons that are sort of out of their control. But long term, I would bet on Netflix and Disney (and IMAX) and that's about it in this general world. ↩
3 Also around the time when MGM fell from grace. An iconic studio which went on to be traded hands many times – now, famously, with Amazon owning them. A tech giant! The horror! (I reserve the right to amend this snark if they fuck up Bond. So far, so good.) ↩
2025-12-06 02:20:10
Earlier today, on the back of the reporting that Netflix was closing in on a deal with Warner Bros Discovery, I wrote up some thoughts. It's obviously a massive deal with ramifications both for entertainment and tech. Just a few hours later, Netflix confirmed the $82.7B cash-and-stock deal. Mind you, that's just for the Warner Bros studio and HBO Max streaming service, the cable channel assets will still be spun-out ahead of this deal closing. So yeah, it's a big price. And certainly a deal unlike any Netflix has done before.
While investors clearly dislike the deal (Netflix's stock has been down between 3% and 5% on a day the overall market is up), it could make quite a bit of sense – if it actually gets completed. Netflix is going to have a hell of a fight on their hands on a few fronts there. Including with Hollywood in general, which clearly does not want to lose another studio, let alone such a historic one, to the hands of tech. But I also don't think it will end up being a bad thing for that industry in the long run. Which is just an impossible thing to hear right now, but it's an industry on the verge of everything being thrown into disarray with AI.
For now, I'll just tout my predictions from last year, both that WBD would be acquired, but also that Netflix would eventually backtrack on their theatrical release stance. Both look good right now. But again, there's a long way to go here. Get the popcorn ready.
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
🌍 Meta Not Investing in Yann LeCun's "World Model" Startup – As expected, while everyone was saying the right things around his exit – how the two sides would continue to work together, yadda, yadda – it sure sounds like Meta won't be investing in his new startup because he doesn't want them investing in his new startup. In fact, he seemingly doesn't want to have anything to do with Silicon Valley anymore – or at least, for now: "Silicon Valley is completely hypnotized by generative models. So you have to do this kind of work outside of the Valley, in Paris." Hypnotized to the point of spending $15B or so to reboot your AI work with offering billion-dollar comp packages, perhaps? He also seemingly confirmed that Meta wasn't interested in his new work – will that end up a mistake? Plenty of others clearly are! [Bloomberg 🔒]
🇪🇺 The EU Strikes Back – While it has seemed like regulators in Europe were taking their foot off the gas a bit with both their own regime change, as well as the situation with the Trump administration, they're clearly still finding new and interesting ways to go after Big Tech. I actually think the probe into Meta over the use of AI within WhatsApp is the type of thing that should be looked into – not because it's Meta, but because all of the scaled players have crazy advantages when it comes to distribution of their AI tools. It's probably what should have been more of the focus in the Google antitrust remedies, but instead the rise of AI ended up helping Google (as it is naturally disrupting Search). Note that this has nothing to do with the DMA and is simply a probe for now – the EU loves to launch probes. Which is still a problem because some seem like completely political wastes of time (or worse) while others seem warranted. On a tangential note, I will admit that I do find it somewhat humorous that the EU is fining Xitter $140M – what characters. [FT 🔒]
🐭 Disney's Two-Mouse Race – It has felt for a while like the battle to succeed Bob Iger as Disney CEO was down to two candidates: Josh D'Amaro and Dana Walden and this reporting all-but-confirms it. Further, it has also at least looked from the outside like D'Amaro has pulled ahead over the past year or so. While it's undoubtedly unfair to use Walden's friendship with Kamala Harris as a data point here, it also probably has to be taken into account because a certain President of the United States will take it into account. And the flip side was also true: had Harris won, such a relationship undoubtedly would have boosted Walden. So it's bad timing/luck. And the Jimmy Kimmel debacle probably doesn't help either. But one new question: does the Netflix/Warner deal change the equation at all? Presumably not, but Walden's role will be even more vital, so could Disney convince her to stay even if not in the top job? Co-CEOs has to be out of the question, right? Even though it's working for Netflix! Sort of wild that 2026 could see new leaders atop two of the major studios... [WSJ 🔒]
💸 Michael Burry's 1999 – A fun read where he goes into his backstory around the Dot Com Bubble. Personally, I had no idea that he was sort of casually writing about stocks on the side of his work as a resident physician at Stanford Hospital. His favorite topic? Like any good blogger: Apple. "Great companies can be missed for a long period of time. Apple was one of them. At the time, I liked where it sat in the culture of creative computing, with a very proprietary angle and a knack for minor hits and long draughts. Plus they had just released their Blueberry, Strawberry, Tangerine, Grape, and Lime iMacs. And I thought, yep, this is the reason to own Apple." He was not wrong. Though perhaps early. See also: his recent podcast with Big Short author Michael Lewis where he talks through his (more nuanced) thinking around his recent short positions on Palantir and NVIDIA. Basically, he simply thinks the AI Bubble is going to burst within the next couple years. [Cassandra Unchained]
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
"We as a company try to manage as responsibly as we can. And then I think there are some players who are YOLO-ing."
– Dario Amodei speaking at the New York Times DealBook Summit about some unnamed competitors, at least one of which is pretty clearly the place he used to work: OpenAI. This is basically the point I was making in writing "AGI or Bust". Great risk, great reward, and all that. But Anthropic's more prudent approach could pay off depending on the markets...
In the same talk, Amodei also said he thinks scaling (LLMs) will get us to AGI eventually (i.e. he doesn't think we need new models – which makes sense for him to say that since, at least as far as anyone knows, Anthropic isn't working on other models). And yes, he also had a fun quote about how they don't do "Code Reds" – like that other company he dare not name.
With all the talk of the AI Bubble, you often hear OpenAI's spend talked about in context of what both Uber spent to get to profitability and before that, Amazon. Well, Jim Reid and Deutsche Bank actually charted it out. And... wow. Code Red indeed.
2025-12-05 18:50:26
"Time is a flat circle," Rust Cohle tells investigators in HBO's hit show True Detective. He is, of course, conjuring Nietzsche while waxing poetic about the nature of life coming back around. In that way, it's the perfect encapsulation of the current situation with Warner Bros Discovery and Netflix.
Almost exactly 15 years ago to the day, then-CEO of Time Warner, Jeff Bewkes, gave an interview to The New York Times on the topic of Netflix:
Now many of the companies that make the shows and movies that Netflix delivers to mailboxes, computer screens and televisions companies whose stocks have not enjoyed the same frothy rise, and whose chief executives have not won the same accolades are pushing back, arguing that the company is overhyped, and vowing to charge much more to license their content.
“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, in an interview last week. “I don’t think so.”
Maybe not the entire world (yet), but Bewkes' (former) world in the form of Warner Bros? Yes. As Lucas Shaw and Michelle F Davis scoop for Bloomberg:
Warner Bros. Discovery has entered exclusive negotiations to sell its film and TV studios and HBO Max streaming service to Netflix, according to people familiar with the discussions.
Netflix is offering a $5 billion breakup fee if regulators don’t approve the deal, said the people, who asked to not be identified because the discussions are private. The two companies could announce a deal as soon as in the coming days, assuming talks don’t fall apart, the people said. The move suggests Netflix has pulled ahead of Paramount Skydance and Comcast, who were also competing for the asset.
[Update: Netflix has now formally announced the deal, see below]
This wild turn of events is far from complete, of course. And, it's so contentious right now that it may very well never be completed. This is a deal with such big ramifications that it has many players up in arms, from Washington to Hollywood. But none more so than Paramount, as the first suitor now scorned.
In a way, I'm reminded of when Warner Bros Discovery was scorned by the NBA in favor of a deal with Amazon. Or when other bidders for Paramount felt scorned when the company went with Skydance. It all comes back around...
One of my predictions heading into 2025 was that someone would buy Warner Bros Discovery. I even guessed that Paramount might be interested in further bulking up post-Skydance deal. While a tech company was always going to be a wild card, to me, Apple always seemed like the most logical bidder given both their size, (relatively weak) position with Apple TV+,1 and the fact that Eddy Cue had tried once before to buy HBO.2 As the most entertainment pure-player in tech, Netflix always lingered, but this type of deal almost seemed like an anti-Netflix deal, something they would have seemingly never done in the past.
But as I know better than perhaps anyone, Netflix loves to say they'll never do something, only to change their minds a few years later and go all-in on whatever the previously ridiculed idea was. In this way, they're like Apple, actually. As I wrote coming up on 15 years ago now:
Netflix has confirmed that they intend to pay for House of Cards a new show being produced by David Fincher (yes, he of Fight Club, The Social Network, etc) and starring Kevin Spacey (yes, he of The Usual Suspects, American Beauty, etc). Netflix is not paying for the full production of it, but instead they’re paying for the first-rights access to air it. In other words, they get the first “window” to show it to viewers.
And while the company is saying that this isn’t a shift in strategy, it could end up being potentially much more than that.
Up until now, Netflix has not had content in this first window. Instead, they’ve focused on the second or third or even fourth window. That is, they’ve shown content after it’s in theaters or on television for its initial run. And sometimes they don’t get content until after it’s been in theaters and then on television for quite some time. This catalog of content has been the service’s bread and butter.
But with House of Cards, the game changes. For the first time, they’re going to get people signing up to Netflix to get first access to content. And if it’s as good as the talent behind it suggests, they might get a lot of people signing up for that very reason.
And if that’s the case, they’ll be doing a lot more of these deals. And that would effectively make them a premium cable television channel — like HBO or Showtime. But they’ll be one with thousands more pieces of content for a lower monthly price. And they’ll be one not burdened by any artificial show times. Most importantly, they’ll be one not burdened by the cable television model — at all.
Narrator: it was, as it turns out, a shift in strategy. And yes, much more.
Netflix was never going to do ads – until they did ads. Netflix was never going to do live – until they did live. Tangential to that, Netflix was never going to do sports – until they did sports. And as I also predicted last year, Netflix was never going to change their mind about theatrical distribution – until they inevitably did.
This deal would all-but ensure such a backtrack becomes reality. I think it would have happened regardless at some point (and still probably will even if this deal doesn't happen), and was already happening in some ways, but this just speeds up the process and the rationale for going against such a seemingly adamant stance.
But the bigger shift will be the deal for WBD itself. Assuming the reports are accurate that Netflix's bid is the largest – does this really mean that their offer for just the studio + streamer is bigger than Paramount's offer for the entire company?! – this deal will be well north of $50B. Perhaps as high as $75B. Perhaps more! And apparently almost entirely in cash. [See: update below]
Netflix undoubtedly will take on debt to make that payment, and so that will be a fun return to some old arguments as well. Remember when everyone was up-in-arms about the amount of debt Netflix was leveraging to produce their content? No one talks about that anymore as it ended up being a smart lever to win streaming. And winning streaming has allowed them to do this deal.
At the same time, that position will also give them headaches for this deal. Given Netflix's streaming stature, Paramount has focused in on making the case as to why the DoJ will never approve such a deal (and they may go hostile, driving those points home). And several regulators are already echoing as much – including, it seems, the US AG's office. This is ramping fast, with many scorned lover letters having apparently been sent. And now legal threats are in play too...
On the flip side, Paramount Skydance says any deal they did with WBD could sail through – even though they just did a smaller deal (for Paramount itself) which was held up for months by regulators. Implied in this, of course, is that the Ellison family now has their "in" with President Trump to make such a deal happen faster this time. (And naturally, to pressure the other one, perhaps.) Did, say, cancelling a certain late night show, and other curious concessions grease those wheels? Well, at the very least, they couldn't have hurt!
Oh yeah, and then there's Comcast. Poor Comcast. Big enough to make a bid but not big enough to be taken seriously, even though they arguably need Warner Bros assets the most. Perhaps they could team up with Paramount?
Netflix, for their part,3 will argue that streaming services aren't the actual market for regulators to worry about here, but rather the broader "time spent" category for eyeballs. Certainly, this includes YouTube, the only video service larger than Netflix. But also increasingly Spotify, TikTok, and other tangential networks. In this way, it will be similar to the (winning) argument that Meta made against the FTC in their antitrust case. Forget about social networks, this is about the future of time spent. And it even has parallels with the Google antitrust case which saw the search giant avoid major remedies because well, think to the future: AI.
Netflix's future is trying to grow from a $500B company into a $1T company – the first "media" company to do so. Would anyone bet against them? I certainly wouldn't. I've been quite vocal about this for years and years. They're simply the smartest and most forward-thinking company that bridges tech and entertainment. As we enter the brave new world of AI, they'll be right there too.
To that end, don't be shocked if while everyone is up-in-arms in Hollywood today about this deal, worried that it will be the end of yet another major studio and perhaps the entire system, that they end up viewing Netflix as a sort of savior in the future when AI comes knocking on everyones' door. Just another prediction I'll throw out there: This deal, if it happens (very much not a sure thing), could end up being very good for Hollywood. It's an industry that has long needed the biggest kick in the ass. And Netflix kicks ass.
So we can all look back on the "Albanian Army" comment now and laugh. Because they're here. At the gates.
One more thing: Back to the concept of time being a flat circle... some may recall another famous/infamous quote between Netflix and Warners. In 2013, then-Chief Content Officer of Netflix Ted Sarandos quipped that the company's goal was "to become HBO faster than HBO can become us." Sarandos, now, of course (co) CEO of Netflix, has gone on to note how he regretted the comment because it was sort of comically limited in scope relative to what Netflix would go on to become. But it sure takes on a different light with this news! In a way, it would fulfill the goal. Netflix would become HBO...
Update: Netflix has now confirmed the deal, a "cash and stock transaction is valued at $27.75 per WBD share (subject to a collar as detailed below), with a total enterprise value of approximately $82.7 billion (equity value of $72.0 billion)."
Now the fun begins. Per the release, it sounds like they're not anticipating these deal closing before Q3 2026 at the earliest, and it could be quite a bit longer depending on the reviews, challenges, etc... Bust out that popcorn.
Update December 6, 2025: Some further thoughts...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Yes, now confusingly just called 'Apple TV'. ↩
2 He couldn't figure out a deal with... Jeff Bewkes! ↩
3 They are also arguing that this deal will be good for consumers – still a key tenant of current antitrust thinking – because a Netflix/HBO Max combo/bundle will bring ever-increasing streaming subscription costs down. Presumably by removing one player from the market! ↩
2025-12-05 07:06:41
Well this is awkward:
Meta Platforms Inc.’s Mark Zuckerberg is expected to meaningfully cut resources for building the so-called metaverse, an effort that he once framed as the future of the company and the reason for changing its name from Facebook Inc.
Executives are considering potential budget cuts as high as 30% for the metaverse group next year, which includes the virtual worlds product Meta Horizon Worlds and its Quest virtual reality unit, according to people familiar with the talks, who asked not to be named while discussing private company plans. Cuts that high would most likely include layoffs as early as January, according to the people, though a final decision has not yet been made.
It also has long felt inevitable. At their conference a few months ago, Mark Zuckerberg threw the Metaverse a few bones, but it was clear where his mind really was, and where he was spending most of his time: AI. The new, new thing. As I wrote in September:
As you may recall, this is a company that was once called Facebook. But now that's just one of many apps in their arsenal. The company shifted to 'Meta' after they bought Oculus and clearly believed that VR would be the future of computing.As it turns out, such thinking may have been premature. In fact, it's still not clear that VR will ever fully mature – at least not to the point that Zuck and company were thinking about four years ago. While it wasn't that long ago, a lot has changed since then. Namely, AI.
And the um, reality, is that this is probably the right call to make. An obvious one, certainly given where all of the rest of tech is focused at the moment. But the rest of tech didn't reorient, let alone rename, their companies around the Metaverse. And so we got a bit of a Zuck two-step at that conference:
"Our goal is to build great looking glasses that deliver personal superintelligence and a feeling of presence using realistic holograms. And these ideas combined are what we call the Metaverse."
Talk about backing into your mission statement! Basically: the Metaverse isn't those VR headsets you've seen talked about online and probably made fun of. Those aren't cool. You know what's cool? Ray-Bans and AI and Holograms. At least for now. As we try anything and everything to break the stranglehold that Apple has on the world with the iPhone.
Speaking of, the writing was probably truly on the wall with regard to Meta's VR efforts when Apple tried and failed to make the market a thing with the Vision Pro. Call it "Spatial Computing", call it whatever you want, there just really isn't a VR market at the moment. There is a Quest market, but it's small and not nearly producing the returns you'd need to justify the spend to date.
In confirming the news for The New York Times, Mike Isaac writes:
Meta is weighing the metaverse cuts as competitive pressure on virtual reality devices has lessened. In 2021, Apple and Google were furiously working on competing virtual reality devices. But as those companies’ efforts slowed, Meta executives came to believe that the company could decelerate its virtual reality efforts, two of the people said.
If there's major competition and an arms race, as there clearly is in AI, you can perhaps justify the spend. And for a moment in time it seemed like there was going to be with Apple entering the VR world. But again, it just hasn't happened so... why not take that spend and pump it into a space that has had some level of success and is seemingly about to get more competition from... Apple.
Meta does not plan to abandon building the metaverse, the people said. Instead, executives expect to shift the savings from the cuts into investments in its augmented reality glasses, the people said.
That makes sense, but come on. That is not the "Metaverse" that Mark Zuckerberg thought he was creating when he renamed the company. He thought he was building Ready Player One's Oasis, not a platform for heads-up walking directions.
So Meta can deny it, but the promise of VR – the actual Metaverse – seems dead. Again. As such, Meta's name will now live on as some bastardized and ironic moniker.
Back to what I wrote in September:
Still, nothing changes eventually if you don't try to change things. So Meta deserves a lot of credit for continuing to push here – and in VR too with the Quest, and the Horizons platform elements Zuck talked up at the end of his portion of the keynote. Meta has gone far beyond the point where other companies would have thrown in the towel. Even if they were true believers, Wall Street would have made them. And that's where founder control can buy what money literally can't. No other public company would be allowed to make such bets for so long. To spend upwards of $100B on projects that generate very little revenue, let alone profit.
The towel may not be exactly thrown in yet, but it sure is being waved now. The stock market is happy, but man, what a whiff.1
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 And it certainly must give one even more pause about their efforts in AI... ↩
