Staff ‘bloodbath,’ Netflix distrust and who’s the real winner – inside the historic Warner Bros. deal

For the past few months, both Hollywood and Wall Street wondered whether Ted Sarandos and Netflix had the stomach to win a bidding war. Yesterday, we got our answer when Netflix walked away from a deal that Sarandos had worked exhaustively to sell to a skeptical industry. 

(And an even more skeptical White House. It’s not lost on us that Netflix bowed out after Sarandos had met with Trump administration and Justice Department officials. Though a source told P6H the meetings went well and the company maintained it had “a clear path to regulatory approval,” the NY Post’s Charlie Gasparino reported that the Trump folks certainly gave Ted the vibe that he was in for a fight to clear the deal).

But aside from the regulatory issues, Sarandos had about 2.8 billion reasons to bail on his quest for Warner Bros. — the dollar amount that Netflix will get from Warner Bros., via Paramount, for killing their deal. The only people happier this morning than David and Larry Ellison are the Netflix shareholders breathing a sigh of relief over not being dragged into a costly bidding war. 

Shareholders were wary about the prospect of such an expensive purchase from the start; ever since Netflix entered the deal fray last fall, it saw billions in market cap wiped out as investors that have praised the company’s build-not-buy approach were jumping ship.

“As far as cinematic moments, imagine seeing Ted Sarandos’ face after he left the White House, where he must have been told, ‘It ain’t gonna happen, Ted.’ There has always been a direct connection between Hollywood and Washington, and perhaps this is the grand champion of how that power gets linked,” a producer who has done business with all three studios told Page Six Hollywood. “And the only thing Netflix can be thankful for is that the millions of dollars in legal fees they paid to make the deal will now be paid for by Paramount.”

The town was split on whether Paramount or Netflix would have been a better suitor. (Though the most popular sentiment was “neither.”) James Cameron slammed Netflix’s approach to movie theaters while others including Mark Ruffalo were wary of the Trump-friendly Ellisons owning two legacy studios. 

Thousands of employees at both studios are now forced to contend with months of anxiety — while the regulatory process plays out, which could stretch into next year — over the threat of another wide-scale layoff that will bring back nightmares of the bloodbath that followed after Disney subsumed 20th Century Fox in 2019.

In the weeks that followed that deal, more than 3,000 pink slips were handed out, including to many top executives.

Employees from both Paramount and WBD are prepping for a “bloodbath,” with several telling P6H that they’re hoping for a round of voluntary buyouts before things get really ugly. “There are so many overlapping departments, I can’t even wrap my head around it,” one Paramount employee says. 

Another Paramount staffer recounted hearing numerous exclamations in the LA office upon the news dropping, ranging from “Holy f–king shit!” to wordless screams.

At least one Warner Bros exec is happy with the outcome: “They are like Scientologists in a cult over there [at Netflix]. I never believed a word they said about theatrical. Paramount has better management, better commitment to theatrical.”

Another TV producer took the other side: “This is basically a library sale. There’s so much duplication of jobs at Paramount and Warner Bros. And the integration will be a bloodbath. Like who wins the battle: Casey Bloys or Cindy Holland? Ted would have kept a lot.”

This producer added that the lengthy regulatory approval process that now awaits Paramount and Warners could give Netflix an opening: “All of the Warner Bros. creatives are basically frozen for two years [while the deal closes]. If I were Ted, I would embrace as many producers with business at Warners. Take these two years to move toward some type of theatrical window. Expand their business.”

The real winner might be David Zaslav. After all, he won’t have to deal with the messy fallout sure to come.