When Netflix (NFLX) abruptly withdrew from its bid for Warner Bros. Discovery (WBD) in late February, many in Hollywood were caught off guard. Co-CEO Ted Sarandos had been publicly championing the deal for weeks.
In his first interview since walking away, Sarandos said the decision was swift and based on pre-set financial limits.
“We knew right away, when we got the notice on Thursday that they had a superior offer and the details of that deal,” he said to Bloomberg News. “We knew exactly what we were gonna do.”
Netflix (NFLX) had established a strict price ceiling and stuck to it. When rival bidder Paramount Skydance (PSKY) improved its offer and added financing guarantees, Sarandos said the choice was clear.
He dismissed speculation that political pressure or regulatory hostility drove the decision.
“This was completely normal,” he said of the Justice Department’s review. “Yeah, we’re in the clear,” he added, referring to reports of a broader DOJ probe.
Sarandos also downplayed the idea that Netflix (NFLX) needed the acquisition to fuel growth, calling it a strategic opportunity rather than a necessity.
“We definitely wanted this asset. We didn’t need it,” he said. The company, he emphasized, is “builders, not buyers.”
On the potential impact of Paramount’s highly leveraged takeover, Sarandos warned that aggressive cost cuts could ripple through Hollywood. He suggested billions in savings would likely translate into reduced production and fewer jobs.
Despite opposition from theater owners and industry figures during the bidding process, Sarandos signaled Netflix may still expand its theatrical footprint.
“I think we’re gonna find a bunch of cool things to do together going forward,” he said, pointing to new collaborations with cinema chains.
For investors, the takeaway is discipline. Sarandos framed the retreat as proof of capital stewardship, saying Netflix (NFLX) would continue investing organically rather than chasing deals beyond its valuation threshold.