Netflix co-CEO faces the $100 billion question: ‘Why are you doing this deal?’

Netflix, which was worth over $500 billion in mid-October, has seen investors send the stock from $124 per share down to around $95 and a $437 billion market cap since, voting with their wallets as the big-red streamer pursued one of Hollywood’s legacy studios. Faber said investors “worry about your multiple. They worry about what it says about how you view your own ability to grow and that your multiple, therefore, will take a hit longer-term here as you integrate this. They worry about integration.” Faber noted Netflix has never done a deal of this size, echoing a question on Netflix’s very first call announcing the Warner bid, when Peters’ own quote about media mergers of this size never working out was repeated to him.

Peters addressed the skepticism head-on, framing the massive acquisition not as a defensive maneuver, but as a necessary evolution for the company.

“I think we’re in the business of doing things that we’ve never done before and learning how to do them well,” he said. He dismissed the concerns raised by Faber, saying Netflix likes its “organic growth path,” but he said this opportunity couldn’t be passed up. “We looked at this and we said, ‘Hey, you know, it’s probably irresponsible for us not to actually bid on this and bid on it in a disciplined way,’” Peters said.

Peters, who was formerly chief operating officer and chief product officer and is based out of Los Gatos in Northern California, was asked if he truly had a difference of opinion on this deal from the Los Angeles–based co-CEO Ted Sarandos.

“No,” he responded. “Actually, it’s been remarkable, because I think that we assumed we might come in with different perspectives on it as well. But, you know, we did the work, and really, the work speaks for itself.”

Peters described work to “build the models” that sounded more iterative than some kind of master plan for the Warner Bros. assets. Earlier in the interview, Peters suggested Netflix was waiting to see how the lengthy process would play out before iterating further.

“If we can, you know, bring it in, then we’ll figure out how to do the integration, just like we figured out how to do a bunch of stuff that we’ve never done before,” he said.

The strategic logic: More than just subscribers

Critics have voiced concerns Netflix is merely buying a competitor to shut it down. Peters rejected the notion Netflix intends to “kill” HBO or reduce competition. Instead, he emphasized the complementary nature of the services, noting that more than 75% of HBO Max members already subscribe to Netflix. This overlap, according to Peters, presents an opportunity to create “better optimized” subscription plans rather than redundancy.

Furthermore, Peters highlighted the deal brings assets Netflix has historically lacked: a successful theatrical film division and a world-class television studio. “We see these as assets, not as liabilities,” Peters said, promising to maintain Warner Bros. operations and release films in theaters with industry-standard windows.

Sarandos voiced similar plans the night before during a surprise appearance at a Tuesday night event in Paris, organized by Canal+.

“Our intentions when we buy Warner Bros. will be to continue to release Warner Bros. studio movies in theaters with the traditional windows,” Sarandos said, in remarks reported by The Hollywood Reporter. “We never got into it before because we never owned a theatrical distribution mechanism,” he added, implying his own well-known rhetoric about how theaters were an “outmoded” and dying distribution model was tactical, since Netflix lacked the firepower to compete with studios such as Warner Bros.

“Our library only extends back a decade, whereas Warner Bros. stretches back a hundred years,” he added. “They know a lot about things we haven’t ever done, like theatrical distribution.”

Sarandos made similar remarks the prior week in New York at a conference hosted by UBS, saying: “We didn’t buy this company to destroy that value. What we are going to do with this is we’re deeply committed to releasing those [Warner] movies exactly the way they’ve released those movies today.”

Some analysts are skeptical, noting Netflix’s long history of saying one thing and then rapidly reversing course, including with regard to its interest in Warner Bros.

“They say a lot of things,” ARK Invest analyst Nicholas Grous told Fortune in an interview last week. “I think if they were allowed to, they would change it overnight,” Grous added, referring to the traditional theatrical window model. If and when that happens, Grous added, it would be a “disaster” and a “death blow” for Hollywood’s traditional business: “If people know, ‘Oh, I only have to wait 25 days or 30 days to be able to watch this on Netflix, I’m just going to wait it out.’” At the same time, Grous said he was impressed with Netflix’s ability to innovate, and over the long term, he could see them reinventing the theatrical experience, which is ripe for a makeover.

The board’s verdict: Why Netflix beat Paramount

While Netflix defended the strategic fit, Warner Bros. Discovery board chair Samuel Di Piazza Jr. separately talked to Faber and Squawk on the Street on Wednesday, clarifying why the board ultimately favored Netflix over a competing bid from Paramount Skydance. Di Piazza described the Netflix offer as “compelling,” citing its heavy cash component, high termination fee, and certainty of closing.

Di Piazza revealed the competing Paramount bid failed to measure up owing to financing concerns. He noted that despite assurances, the board lacked confidence that the equity financing—backed by Oracle cofounder Larry Ellison—would be secure at closing. “Doing a deal is great. Closing a deal is better,” he remarked, adding Netflix provided a “clean” structure and an investment-grade balance sheet that Paramount could not match.

The regulatory battle ahead

The acquisition faces a steep climb with regulators in Washington and Brussels. Peters acknowledged a probable 12- to 18-month timeline for approval, but expressed confidence the facts support the deal. He argued that regarding “TV view share,” the combined entity would still trail behind giants like YouTube and Disney. Peters, as he did at the UBS conference, did not comment on streaming share, where Netflix would be a much larger player, although a clear No. 2 behind YouTube.

To court the incoming administration, Peters pivoted to an economic patriotism argument, citing the creation of 140,000 jobs by Netflix in the U.S. over the past four years. He positioned the merger as a win for American industry, bringing an “iconic studio into a sustainable model” that protects union jobs. When asked if Netflix would fight a potential lawsuit from the DOJ, Peters was unequivocal: “We have a good case, and we believe that we should defend that case.”

Editor’s note: the author worked at Netflix from June 2024 through July 2025.