Investors didn’t want Netflix to buy Warner Bros. Discovery.
Republicans didn’t want the deal to happen, either.
So now it’s dead.
That’s the cleanest and most likely explanation for Netflix walking away from the $83 billion transaction it agreed to a few months ago.
Netflix’s move means that, barring something very surprising, Larry and David Ellison’s Paramount will end up owning all of WBD: not just the movie/TV studio and HBO, which Netflix wanted to buy, but its collection of TV networks as well, including CNN.
We may hear other explanations for the Netflix move in coming days. But my educated guess is that this is a real Occam’s situation:
At one point, Ted Sarandos and company thought they had done enough to win over Donald Trump, which is what you need to get a merger done in 2026.
But Trump never announced that he would actually favor Netflix’s bid over the Ellisons’, who have done a lot of work to woo Trump. At a congressional hearing earlier this month, Netflix got a taste of the pushback it would get from Republicans, who accused the company of pushing woke content on its subscribers.
And last weekend, Trump reminded Netflix of his penchant for pushing around American companies from his bully pulpit, when he demanded that Netflix fire a board member who offended him. It’s worth noting that Netflix’s Thursday announcement came hours after Sarandos visited the White House. If he was looking for assurances that the Trump administration would back his deal, it doesn’t seem like he got them.
Meanwhile, Netflix shareholders had been signalling their distaste for the deal for weeks by pushing down the company’s stock. Netflix shares began rebounding this week as it became clear that Paramount’s chances of winning the deal were getting better. (They shot up 10% in the hours after Netflix bailed out.)
So Netflix’s surrender makes plenty of sense: If your investors don’t want the deal, and the people who need to approve the deal don’t want the deal, what options do you really have?
What all of this means for WBD and its various assets is way too early to tell. Will Bari Weiss, who was installed as the head of CBS News last year, now oversee CNN, as well? Will HBO employees, who seemed cautiously optimistic about going to work for Netflix, feel the same way about the Ellisons? What about the people running the Warner Bros. studio, who have been on a historic hot streak?
And while we’re asking questions: In December, Paramount said $24 billion of its financing would come from three Gulf states: Saudi Arabia, Qatar, and Abu Dhabi. Is that still the plan? I’ve asked Paramount for comment.
We will have plenty of time to speculate and report about all of that.
One thing we do know: Assuming Paramount’s deal goes through, it will mean the Ellison family, who were minor players in media just a year ago, will now be titans: They’ll control a conglomerate that owns two movie studios, two major news operations, two major streaming services, and a broadcast network with a long-running NFL deal. And Larry Ellison’s Oracle now owns a piece of TikTok’s US operations.
That’s an astonishingly large and influential portfolio for any owner, let alone a family with a minimal track record running media companies.
It’s also a family that has repeatedly tried to convince Donald Trump that they’re in his corner. Granted, the reality may be more complicated than the optics — people who complain about Paramount firing Trump critic Stephen Colbert, for instance, tend not to say much about Paramount re-signing Trump critics Jon Stewart and the South Park guys.
But the facts are the facts: Last fall, David Ellison told us his family had a good relationship with Trump. On Thursday, we saw the likely benefits of that relationship.
Disclosure: Mathias Döpfner, the CEO of Business Insider’s parent company, is a Netflix board member.
