Netflix enhanced dealmaking skills during Warner Bros. pursuit, Ted Sarandos reveals

Netflix “strengthened our M&A abilities” during its unsuccessful attempt to buy Warner Bros, Co-CEO Ted Sarandos told Wall Street analysts Thursday.

“We’ve gained valuable insights into deal execution and early integration,” Sarandos shared. 

“We are extremely proud of the teams behind this effort. Winning the bid made us proud, and we were confident we could achieve regulatory approvals. However, the biggest takeaway from this experience was testing our investment discipline. When the deal’s cost surpassed the net value for our business and shareholders, we put emotions and ego aside and decided to step back.”

These remarks were made during a quarterly post-earnings video session with analysts following the announcement of a strong first-quarter performance, where both revenue and earnings surpassed Wall Street analysts’ forecasts.

In late February, more than two months after its $82.7 billion offer for the studios and streaming division of WBD was accepted, Netflix withdrew from the agreement after Paramount improved its offer. 

Although Netflix executives have commented on these developments over the weeks, Thursday’s statements marked their first direct communication to investors.

“Our greatest challenge was the risk of losing focus on our main business while working on the transaction,” Sarandos added during the discussion. 

“However, as our Q1 results indicate, we maintained our focus successfully. We’re very encouraged by the team’s ability to keep their eyes on our core business while considering this opportunity. Historically, we’ve been more of builders than buyers, so there were certainly questions internally and externally about our capacity to handle a deal of this magnitude. What became clear was that our teams excelled at the task.”

Sarandos, Co-CEO Greg Peters, and CFO Spence Neumann have all reiterated previous messages that Warner was considered a “nice addition rather than a necessity.”

While Sarandos didn’t specify any strategic plans regarding future M&A, he mentioned that handling it with WBD “prepares our teams to understand that such is expected of them in their daily operations.”

Reflecting on the failed deal, Sarandos, who was photographed in December walking on the Warner lot in Burbank with Peters, shared, “We met a lot of impressive individuals at WBD during this process. If there’s any emotional aspect, it’s the disappointment of not collaborating with those folks, as we were really looking forward to it.”

Financially, Sarandos stated that the decision to abandon the merger signifies “no shift in our capital allocation strategy. We invest in the business both organically and through M&A when needed.”

The company’s recent acquisition of Ben Affleck’s AI firm InterPositive is an example of their appetite for dealmaking, the executive noted. 

The company conducts deal evaluations while “maintaining strong liquidity, returning surplus cash to shareholders through buybacks. 

Hence, M&A remains an integral tool for achieving our goals. With the WB deal, we demonstrated our disciplined approach.”

Last month, Sarandos mentioned to Politico that Paramount “effectively created a compelling narrative of a regulatory challenge that was nonexistent.” 

Both competing bidders argued that the other’s agreement would lead to monopoly concerns. 

Throughout navigating the regulatory process and handling industry response, Netflix made it clear they would respect Warner’s theatrical windows and preserve the studio and HBO.

Netflix shares, which had dropped over 30% since interest in Warner emerged last fall, have experienced a rebound after deciding to pull out of the deal. 

By Thursday’s end, they had risen over 15% in 2026 to date, despite a dip in after-hours trading.