Netflix co-CEO Ted Sarandos has issued a stark warning about what Paramount’s acquisition of Warner Bros. Discovery will mean for Hollywood, predicting the combined company will be forced to cut costs exceeding $16 billion within 18 months of the deal closing in order to service the debt taken on to finance the takeover.
“This deal is dependent on a lot of cost cutting,” Sarandos said. “We were in the books of Warner Bros., and the biggest cost centers are people in productions. There will be cuts in excess of $16 billion. They are telling people who lend them the money that is going to happen in 18 months or so. It would be less production, less people working.”
The comments carry weight because Netflix had direct access to Warner Bros. Discovery’s internal finances during its own months long pursuit of the company. Sarandos said the decision to withdraw had been made earlier, based on various bidding scenarios Netflix had worked out in advance.
On February 26, Warner Bros. Discovery’s board determined that Paramount’s revised $110.9 billion offer, valuing shares at $31 each, constituted a superior proposal to the existing Netflix agreement. Netflix declined to match the offer and withdrew, allowing Paramount Skydance to proceed as the winning bidder. The deal is expected to close between September and December 2026, pending regulatory and shareholder approval.
Netflix will not leave empty handed. Even after losing the bid, Netflix is set to collect a $2.8 billion breakup fee tied to its earlier agreement with Warner Bros., a payment Paramount agreed to cover. Netflix shares closed 13.75 percent higher on Friday following its withdrawal.
Sarandos called Paramount’s winning bid unusual and irrational, and said the acquisition could become a seismic event for the US media landscape, one that forces the new owner to shrink headcount and production to service the debt required for the deal.
The cuts, if they materialise at the scale Sarandos predicts, would ripple across Warner Bros. Discovery’s sprawling portfolio including HBO, CNN, Warner Bros. film studio, and its games division. Warner Bros. Games, which houses studios including Rocksteady and TT Games, had already posted a 34 percent revenue decline in the fourth quarter of 2025. Netflix co CEO Greg Peters had previously remarked that Netflix had not attributed any value to Warner Bros.’ gaming division in its own acquisition model.
The deal faces a Senate Judiciary Committee hearing scheduled for Wednesday, March 4, and scrutiny from regulatory bodies is expected to shape the final outcome.
Sarandos was careful not to gloat.
“I am confident in our future that we are not impacted by all that. In fact, maybe it is to our advantage. But I hope I am wrong for the sake of the industry.”
