Of course we stream once a week and of course
the day after we stream Thursday at 8 p .m. Pacific
time big huge news breaks the next day Which
annoys me because then we can't talk about it
on stream So We have been talking about and covering
this story for a while Warner Brothers had said
hey, we're open to the idea of an acquisition
yada yada yada And then there was some informal
bids made by Netflix and Paramount and Comcast.
And then Paramount sent a really stupid letter
the day before this was announced to Warner Brothers
being like, well, there's some shenanigans going
on and we're close to the administration. Be
ashamed if anything happened to this deal. Well,
the deal is happening. And I'm putting that in
air quotes for right now. December 5th, Netflix
and Warner Bros. announced that they have come
into a definitive agreement under which Netflix
will acquire Warner Bros. including its film
and television studios, HBO Max and HBO. This
is from the Netflix press release. The cash and
stock value of this transaction $7 .75 per share
for a total enterprise value of $82 .7 billion.
dollars the deal is expected to close after the
previously announced separation of WBD's global
networks division, which is like discovering
all those channels, into a new publicly traded
company, which is expected to complete in Q3
of 2026. So again, we have been talking about
this one for a long time. We've kind of gone
back and forth on this. I think privately you
and I were both kind of hoping Apple was going
to make kind of an 11th hour offer, given the
stuff that Apple and Warner Bros. done together
and Apple has the money. That didn't happen.
Netflix got them. So just before we get into
what Netflix is saying, obviously there's been
a lot of reaction on the internet about this.
And we don't want, we're not trying to be the
typical reaction. Like I don't want to just be
like, this guy is falling. So Jay, first, what
was your first like reaction when you heard this
news? And then kind of now that you've simmered
on it for a second, what is your first thoughts
about this? Yeah, so my first first reaction
is like pretty much there are worse companies
to acquire right like we talked about this a
Week ago two weeks ago. Like we did not want
paramount to acquire WB. So that hasn't happened
yet. Obviously, you know as you mentioned, they
are really close to the Trump administration.
So we'll see how that actually plays out. But
yeah, my initial reaction was like, okay, could
be worse. Could be worse. Yes. And yeah, we were
both of the opinion that Paramount getting it
was bad. Now, again, to clarify both Jay and
I's kind of general philosophy on consolidation
and stuff like that. I don't like corporate consolidation.
I think it's bad for every industry. I think
Jay agrees with that statement, right? We were
not fans of anybody acquiring WB, but we also
live in reality, right? And WB is a publicly
traded company and these things happen and they
have a fiduciary duty to their shareholders,
et cetera, et cetera, et cetera. So as much as
we would like for them to not be acquired. We
knew that was not going to happen weeks ago.
It was going to happen. Paramount's recent moves
and kind of what Ellison's doing and how close
they are to the Trump administration. Dick in
mouth would probably be an appropriate statement
for what that is. Right. I. Yeah, we didn't want
that. The the obvious downside to this obviously
is that Netflix and Ted Sarandos their CEO has
always been critical of theaters They don't do
a lot Netflix very rarely releases their stuff
at theater when they do they do it for short
stints and it's kind of a gimmick Here's what
Netflix is saying, okay? And again, this is all
from their their press release, right? They're
saying that this this helps Netflix Warner Brothers
Studios are world class, which I don't think
you can deny. HBO and HBO Max have an amazing
brand as far as prestige television going all
the way back to The Wire, The Sopranos, Sex and
the City, Game of Thrones, The Last of Us, all
those shows. They think it gives more choice
and greater value. They think it will help the
entertainment industry. That's debatable. More
opportunities for the creative community. Again,
debatable and more value for shareholders. Of
that, I am I have no doubt. More value for the
shareholders, I'm sure. Let's take the optimistic
view. What Sarandos has said is that Warner Brothers
will continue operating independently, right?
They've said that the creative teams like DeLuca
and Abdi, James Gunn and Peter Safran, et cetera,
will stay in place, right? Which is good. I think
that those are good moves. We also covered this
earlier this year. Warner Brothers set records
this year. Warner Brothers had how many how many
films over 40 million in a row? Seven consecutive
films this year that opened to more than 40 million
dollars at the at the box office. Right. Everything
from Minecraft to Superman to Conjuring. opened
above 40 million dollars, weapons opened above
40 million dollars. So the the the the non pessimistic
view of this is and I think, Jay, you would agree
with this. Netflix doesn't know how to make movies.
Their movies are terrible. And they overspend
on that electric state movie with Chris Pratt
was 300 million dollars they spent on that. That's
ridiculous. What was the other one? They're just
not good at making movies, okay? They also have
never had a distribution pipeline, so even if
they would have wanted to put it in theaters,
they don't know how to do it. What they're getting
with Warner Brothers is a distribution pipeline
and a whole big history of successful film. So,
to me, the optimistic view is that Sarandos is
going, look. We don't know how to release movies
in theaters. We know that people want us to do
it They'd already Netflix had made the deal with
Greta Gerwig that Narnia movies coming out in
theaters Right now that you add Warner Brothers
to that mix. What does that change for that movie,
right? There's so that's the optimistic views
that they that Netflix is looking at this and
going we don't know how to do this So instead
of trying to invent it whole cloth we're gonna
We're going to buy somebody who knows how to
do it. The other optimistic view of this is that
they're not killing a studio. If Paramount and
Warner Brothers merge or Comcast Universal and
Warner Brothers merge, we're down one more studio.
That's one less of the major studios. Netflix
is in a studio, not really. And so we didn't
lose anything from that perspective. What are
your thoughts on that kind of like that optimistic
view? Yeah. I 100 % agree with that. I'm also
trying to real quick, I'm going to pull up an
example that I learned about an NBA school. Yes,
so I, I do agree with that. And also, it's not
uncommon for companies to buy other companies
and then just, they might change their process
and procedures to make them more efficient or
profitable, but They keep that company running
in place. So, for instance, if you pull up a
chart of who owns what beer companies, you'll
see that the same company that owns Bush Light,
Natural Light, Bud Light, like they're all owned
by the same company. A .B. and Beth. Yep. And
then also Modelo is owned by the same company
that owns Pacifico and Corona. Like it's very
common. And I think Netflix isn't going to Acquire
WB and then just kill WB just not have them release
movies on the movie theater I think they're going
to acquire net acquire WB and then just let WB
continue operating But then they have their funnel
to get their movies into theaters and and also
funnel everything to Netflix, right? You're never
gonna see a Warner Brothers movie on peacock
ever again I'm joking mostly about that. Those
guys cross -pollinate all the time Okay So that's
kind of the optimistic view. Now the other thing
that we gotta look at is, is this gonna actually
happen? Because yes, while the deal has been
announced, the other thing that nobody's talking
about is, will this deal actually happen? So
Jay, you've got some notes about the next steps,
right? So run us through the next steps. Yeah,
so they do have to do what is called an HSR filing
with the Department of Justice Then the Department
of Justice has 30 days to do an initial review
and most likely they're going to file for an
extended review And then all they have to do
is just sit on their hands. They can sit on their
hands for a year or longer They don't have to
do anything with it And why would they do that?
There's a lot of people looking at this deal
So you have traditional old Hollywood that doesn't
like this deal. You have the Ellison's, obviously
the Trump administration. You got actors, you
got state attorney generals who are looking at
this from a consumer perspective. And right now,
I think everyone's trying to decide like who
is on what side. And also keep in mind a co -founder
of Netflix, Reed Hastings. Hastings. Hastings.
It has been very anti Trump and has put a lot
of money and support into governor Newsom So
and you can you can see this in this initial
news report from CNBC where it was breaking.
We'll show you that now We got regulation to
worry about and approvals not just here in the
states, but elsewhere Let's bring in Amon Javer's
David stick around Amon as for the president
Whether he wants to disrupt this deal and we
know about his ties to Ellison's father talk
a bit about that, too Yeah, Carl, we're getting
some news here our first reaction now from the
administration I was just in contact moments
ago with a senior administration official who
tells me that the administration's view of this
deal can be characterized as heavy skepticism
So even if even if they want this deal to go
through you're right they can sit on this for
a year now Do I personally think that Ted Sarandos
and David Zaslav will show up at the Oval Office
bearing out a white Netflix or gold Netflix logos
and give them to the president? Yeah. And we've
talked about this a lot. Trump listens to whoever
the last guy that talked to him was. And yeah,
I'm sure this is pissing the Ellisons off. I'm
sure they're going to sue over this. So again,
you have the HSR, which is a 30 -day, then they
go, OK, we actually need more than 30 days to
look at an $82 billion deal. They do the extender
review. And then if the Ellison's and or Comcast
Universal decide to sue Netflix and Warner Brothers
over the process, then this. Then if the Federal
Trade Commission goes, no, you can't do it, then
Warner Brothers and Netflix sues the DOJ and
the Federal Trade Commission. And that one probably
has to go all the way to SCOTUS. to determine
if it's an antitrust violation. That being said,
under any other administration, I'd be like,
yeah, you might get him on antitrust. The thing
I think saves this from antitrust is the thing
that would have killed it if Paramount or Universal
got it, which is you're already movie studios.
Netflix has a strong argument from a trade perspective,
from an FTC antitrust perspective to say, we're
not like the other guys. We're a tech platform,
man. That's what we are. And so we're going to
acquire a studio now. I'm with you, A, even at
the soonest that Netflix is saying, Netflix is
saying Q3, 2026. So almost a year from now. Then
you've still got the Federal Trade Commission,
the Department of Justice, the Antitrust Division,
the Department of Justice, the Trump administration,
and everybody else who's going to stick their
fingers in this whole thing. And so while it's
interesting that this deal has been made, right?
A, I don't think there's any guarantee it's going
to happen. Do you? No. And I do want to go back
and touch on a point that you you actually brought
up about free trade. If this trade does not go
through, this actually impacts free trade by
a lot. I mean, from my understanding, Paramount
offered less But also wanted CNN Netflix offered
more without CNN So for them to go back and say
like Netflix isn't going to get this deal and
then it should go to Paramount is I think this
is hugely like disturbing for the open market
It is especially given the moose and this is
one of the reasons you and I talked about we
didn't want Paramount to get it Was when they
acquired when when Skydance acquired Paramount?
Ellison made some very controversial moves over
at the CBS News division By putting Barry Weiss
in charge of the CBS News division and there's
been some questions about what's going on over
there right now to the point where and we talked
about this to the WGA which also represents on
-air news people was like they were getting emails
from Barry Weiss going what do you do very dogey
emails and And and the WGA was like, don't answer
those emails. Don't. Not until we know what's
going on. Right. So, yeah, I'm. Top of my head,
I still think it's a coin flip whether this deal
goes through. Yeah. Obviously, the Ellison's
are going to try to cancel it. They're in line
with. the Trump administration. So I agree. I
think it is. But I think Trump can be bribed
by Netflix and Warner Brothers if they really
want to do it. Yeah, that's that's also true.
So, yeah, it's not. This is really interesting.
You know, it's the announcement was made, but
then like nothing is really set in stone as of
right now. So. As as is normal. Right. These
deals are not small. It's not like buying a house,
you know, where you're closed in 45 days. This,
you know, again, this is minimum a year from
now. Now, again, on the on the pessimistic, you
know, it is Netflix. Is it possible that Netflix
is going to pull a Disney and what they just
did with Hulu and just completely subsume HBO
into their platform? Yeah, I think it's possible.
Is it possible that Netflix, using the way that
they have now, reduces the theatrical window
from 45 to 30 days or even 15 days? Yeah, I think
that's a problem. I don't want to downplay the
people who are concerned about this move, right?
Because there are... There are concerns to be
had. And a lot of the optimistic side is you
don't think Ted Sarandos is full of shit, which
is debatable at best. Wouldn't you agree? Yeah,
100 percent. I do agree. So. Obviously, we've
been covering this one for a while. We'll continue
covering the story. If you want to see more about
it, we stream every Thursday at 8 p .m. Pacific
Time right here on our YouTube channel or over
on twitch .tv slash error code show so you can
get our live stuff. If you want to interact with
us directly, you can interact with us directly
right there. But we're curious what you have
to say about this. Is it a good thing? Is it
a bad thing? Are we blowing everything out of
proportion? Do we even think it's going to happen?
Right. Who knows? Let us know what you think
in the comments below.