Summary

Alex Morris thought Netflix’s bid for Warner Bros. was excessive — not the absolute price, but the value transfer. “A significant percentage of the price tag making sense was from value that Netflix specifically could add,” and handing that upside to WBD shareholders was “a bridge too far.” His portfolio priors: Disney held for more than 10 years (“has not worked very well”), Netflix bought in 2022 as “the canary in the coal mine,” ran to the mid-teens of the portfolio and was then trimmed. Andrew’s summary of the decade: “Sell everything except for Netflix. That’s the only thing that’s worked in media for the past 10 years.”
Andrew is deeply skeptical Paramount Skydance can execute the $100B+ WBD integration; Alex sees the strategic logic but warns that execution will be extremely difficult. Alex’s receipts: the April 2021 WarnerMedia-Discovery deck guided 2023 revenue of $52B (2025 revenue: $37B), DTC of $15B or more (2025: just shy of $10B), EBITDA of $14B (2025: $8B), and roughly $8B of free cash flow based on 60% conversion (2025: $3B) — “they missed every projection by a really wide margin” as cord-cutting accelerated from low- to high-single digits. Pro forma, linear is north of 50% of revenue and ~80% of EBITDA; the two linear/TV-media businesses together generated about $20B of revenue at an 8% EBITDA margin, while WBD’s domestic subscribers fell 10% versus peers at roughly 6-7%.
Andrew’s flat verdict: “It is just an absolute disaster” — and he “wouldn’t be surprised if Netflix is buying the pieces in three, four, five years.” His precedent is Seagram buying MCA in 1995 and later doubling down with PolyGram — “a disaster, a family tragedy” per the Bronfmans. He has “absolutely no doubt” the $6B of synergies exist; his doubt is finding them “without destroying the core business,” while David Ellison simultaneously promises more content and, Alex believes, said they would increase product engineers 10×.
The IP that everyone bid for may be worth less than the auction implies. Alex’s Sex and the City math: the show drove ~0.5-1% of all US Netflix engagement during periods when it was released on Netflix, 20 years after its finale — yet 800 other seasons had comparable or higher viewership in the same window, and three shows, including Squid Game and When Life Gives You Tangerines (plus one title Alex forgot), had more viewership in six months than Sex and the City had during its entire time on Netflix. “What does IP actually mean?” on a global platform is the open question, and “is it game-changing for six months or five years?” is one he’s “never been particularly confident” about.
Netflix’s next act is acceleration, not pivot — sports gets more prominent and international gets supercharged. Alex says the failed deal would have given Disney a pricing umbrella and kept Netflix’s sports ambitions “a bit more of a sideshow”; he thinks that likely changes now. The scale gap is stark: WBD’s international DTC does $3.5B in revenue against Netflix’s $27B, and competitors “just can’t act with the level of aggressiveness that we can.”
Why Netflix actually walked is contested. Andrew has “never seen” a signed buyer exit at the first superior bid, notes Ted Sarandos was at the White House the day Paramount’s bid landed and Netflix dropped out that afternoon, and leans toward Netflix receiving a quiet warning of U.S. government opposition. Alex leans discipline — Netflix told WBD upfront “best and final proposal” — but concedes “if going 5% higher was going to break it, you were too close to the line anyways.”
Versant is the structural loser both criticize. Andrew: distribution deals roll off in 2027-28, distributors will “laugh them out of the room” without NBC’s umbrella, and the NASCAR split gives them “the worst of all worlds” — if rights work, NBC takes them; if not, Versant is a “tier four media asset.” Alex says the spin strategy is “not sound at all” and was “done for the wrong reasons.”
The next NFL round goes “up up up” while Disney’s existential question stays open. Fox without the NFL is “basically the Masked Singer at that point” and can bid up to the EV of the company; CBS is nearly as trapped. ESPN would die without NFL rights, but Andrew says it is in the best position because of its partnership under which the NFL owns a 10% stake and should retain access to NFL rights in some form. Alex says Disney’s entertainment DTC has “made the turn,” but ESPN’s flagship launch was probably weaker than he expected, ESPN+ “was really the wrong strategy and cost them years,” and whether Disney goes all-in on the live-rights bundle or exits is “still an open question.”

Deep dive

1. A decade of scar tissue: only one media decision worked

Alex opens with his priors, good and bad: bought Fox for its live rights before he “fully understood” the transition, took Disney equity in the Fox deal and has held it for more than 10 years — “obviously has not worked very well.” His one clean call: Netflix’s 2022 troubles made them “the canary in the coal mine” — the pain would hit everyone else, and their reactions “would be a huge net positive for Netflix.” He bought, rode it to the mid-teens of the portfolio, and trimmed as the stock “got killed” ahead of the WBD saga.
Andrew’s cheerful indictment of the sector: “For the past 10 years, there’s been one good decision in media… Sell everything except for Netflix.”

2. The bid Netflix walked from — and whether Zaslav earned his billions

Alex long saw Warner Bros. and NBCUniversal as two particularly attractive assets for Netflix, but judged the price excessive “in terms of the amount of value that was going to be transferred from Netflix to Warner Bros. Discovery shareholders” — much of the number only penciled with value Netflix uniquely creates, and giving that away was “a bridge too far.” Andrew’s auction framing: standalone worth 1, to Paramount 2, to Netflix 2.5 — “the more bidders at auction, the more I get to take the value from you” — with Comcast reportedly lobbing a bid it valued at 35, half the company plus cash.
Alex’s contrarian take on David Zaslav: for all the flak over pay and performance, “he played it masterfully” — engineering a rich Netflix deal knowing Skydance “really, really, really” wanted it, then getting very close to or ahead of that value. “When you’re dealing with big numbers, that pay can be justified.”
Andrew’s pushback — worth keeping: “the deal was a disaster,” Discovery flat-to-down over 10 years, WBD still valued below where the merger happened, and “I’m not even sure he ran a good process.” Though he concedes HBO is “firing on all cylinders again” and “DCU might be in a better place than Marvel is right now.”

3. Did the bid reveal a weak core? “My answer in a word is no”

Andrew’s setup: Netflix has done five deals worth roughly $600M in its entire history; jumping to $100B M&A made investors ask whether “they were seeing something in their internals.” Alex rejects that but names the real issue — Netflix’s share of US streaming TV time has been at best stagnant and has been going down, hence ads, live, gaming, podcasts and mobile. The IP questions he keeps returning to: how much do you pay, how is it monetized now, and how translatable is the answer to other IP?
On capacity, Alex notes $80B of cash “would not have been insignificant” — Andrew: “This is not NVIDIA. This is not Google.”
Next steps per Alex: continuation, accelerated. The deal would have given Disney a pricing umbrella and kept Netflix’s sports appetite “a bit more of a sideshow” — “I think that probably changes now.” Internationally, WBD’s DTC does $3.5B in revenue versus Netflix’s $27B, and deals like the French local live-rights tie-up — Alex thought the name might be TF1 — can be replicated across “the top 10, 20, 30 markets outside the US” against rivals who “just can’t act with the level of aggressiveness that we can.”

4. What even is IP? The Sex and the City demolition

Alex’s best specimen: Sex and the City, whose series finale was in 2004, drove roughly 0.5-1% of all US Netflix engagement during periods when it was released — “pretty darn impressive” — yet in the most recent engagement report, 800 other seasons had comparable or higher viewership. Three shows had more viewership in that six-month window than Sex and the City had during its entire time on Netflix, including Squid Game and the Korean show When Life Gives You Tangerines; Alex forgot the third title.
Andrew’s scale math on why Netflix wins big cultural moments anyway: a $50M Taylor Swift concert spread over a billion users is 5× cheaper per user than for Disney’s 200M — “scale begets scale,” a point he flags for the sports-rights discussion.
The library-value question Alex has never resolved: “What really is the value of The Wire or The Sopranos… is it game-changing for six months or a year, or five years?” And is The White Lotus even “IP”? HBO’s real skill is creating hits from unknown quantities — something Netflix “has to continue to get better at, which apparently is quite hard to do.”

5. The AI galaxy-brain risk — and the theatrical tell

Andrew’s self-labeled “galaxy brain” scenario: Larry Ellison — “the man has nailed almost every single technological shift” — and Netflix both appeared to treat Warner Bros.’s IP as the benchmark. Andrew asks whether AI could juice the value of IP and weaken Netflix’s distribution advantage. Run it forward five years and fans go to “The Sopranos AI” to spin up three personalized episodes — “what if Ned Stark had escaped” — and “all the economics are clinging to the IP” while Netflix’s distribution no longer matters.
Alex’s answer: either way Netflix “needs to have IP that is relevant to people,” via one-off acquisitions or Sony-style global licensing, while contemplating AI-related uses as it negotiates those deals. On theatrical — attendance down 40% over two decades, audiences having “voted with their feet” — he questions the claim that seeing WBD’s books made the theatrical business a good fit: “That’s kind of like, okay, I guess I hear what you’re saying.”

6. The one deal piece that made sense: HBO back to the temple

Andrew argues theatrical releases and weekly drops build memory and brand — Stranger Things’s final season was probably split partly because it cost so much, while also extending retention; the “water-cooler moment” is how you build IP. Alex’s counter is Netflix’s flexibility itself: Love Is Blind now drops weekly, and Hastings’ “two religions basically are customer satisfaction and operating profits. Everything else is just a tactic.”
The deal logic Alex actually liked: return HBO Max to traditional premium HBO positioning with tentpole movies and familiar HBO content, and put more filler content on Netflix in some capacity. Domestically HBO has under 60M subscribers (50M a decade ago) at roughly $10 ARPU: “It has an audience, but that audience is only so large.” Internationally, “they probably could have just done away with it… and made it a tile.”

7. Financial discipline or the White House?

On regulatory blowback — Republican senators, Europe — Alex says Netflix “should have been eyes wide open”: they sit in the big-tech bucket, and Hollywood’s whiplash proves the politics (“oh my gosh, we’re going to get bought by Netflix… then the buyer changes — oh my god, this is actually even worse”).
Andrew’s theory on the walk-away: he’s never seen a signed buyer quit at the first superior bid; Sarandos was at the White House the day Paramount’s bid landed and Netflix dropped out that afternoon — he leans toward Netflix being told “in no uncertain terms, the US government will be opposing this deal.”
Alex leans discipline — Netflix explicitly told WBD “this is our best and final proposal” — but grants the margin was too skinny: “If going 5% higher was going to break it, that might suggest you were too close to the line anyways.” He ties it to Sarandos’ talent-deal framing, which he thinks was on Matt Belloni’s podcast: Sarandos said deals are structured around success and include “a discount for the value that we bring to the table.” Alex thinks this deal “never had that last component.”

8. Paramount-WBD by the numbers: “the WarnerMedia deal all over again”

Alex walks the April 2021 WarnerMedia-Discovery deck line by line: 2023 guidance of $52B revenue versus $37B in 2025; DTC of $15B or more versus just shy of $10B with two extra years; EBITDA of $14B versus $8B; and free cash flow estimated at roughly $8B based on 60% conversion versus $3B. “They missed every projection by a really wide margin,” with Alex’s sense being that the main reason was cord-cutting accelerating from low-single to high-single digits. Andrew: “It’s borderline a SPAC projection deck.”
The pro forma picture: linear networks are north of 50% of revenue and ~80% of EBITDA. The two linear/TV-media businesses together are about $20B of revenue and $1.6B of 2025 EBITDA, an 8% margin, versus Netflix’s low-teens margin at the same revenue scale. WBD’s Q4 FY25 domestic subscribers fell 10%, while Alex believed most peers were down around 6-7%, and distributors are pushing back against the double-dipping that Peacock/NBCUniversal and Paramount+/Paramount had been doing.
The pricing trap: HBO Max’s roughly $10 ARPU sits against list prices of $11/$18.50/$23; Paramount+’s global ARPU is roughly $6.50-$6.60 against $9/$14 lists. Consolidating platforms — as Disney has experienced with Disney+ and Hulu — “is very, very challenging,” and PSKY’s cited precedents are Paramount+, Pluto (the “largest FAST service by a very wide margin”), and BET+.
The Zaslav echo Alex fears: Ellison promises more shows and a better tech platform than Netflix and, Alex believes, said they would increase the number of product engineers 10× — but “if the linear side starts to go against you… content and marketing spend on the DTC side is where it happens.”

9. Andrew’s disaster call — and the bifurcation problem

“I think it is just an absolute disaster.” His precedent: Seagram bought MCA in 1995, later doubled down with PolyGram, and the Bronfman verdict was “a disaster, a family tragedy.” On the promised $6B of synergies against what Andrew said was roughly $8B of standalone Warner EBITDA: “Anyone can find a cost cut… you want to make sure you don’t find the Ebola-prevention cost cuts.” He sees the vision — no Big Four network conflict and a CBS umbrella for rights renegotiations — but execution is “devilishly hard,” Ellison has never cut billions operationally, and “I wouldn’t be surprised if Netflix is buying the pieces in three, four, five years.”
Alex’s rights-bifurcation warning: the UFC-on-Paramount+ deal ($8.99, no pay-per-view) is “massively beneficial for customers,” but the talk of also scattering cards across CBS and TNT recreates the confusion. As a distributor: “It’s all the same thing… I’m just not going to put up with it, and we can let customers decide.”

10. Versant: cheap, hated, and “the worst of all worlds”

Andrew’s structural case: all distribution deals roll off in 2027-28, and without NBC’s umbrella “the distributors are going to laugh them out of the room.” The NASCAR deal — Andrew believed four races were on USA and eight on NBC — is the tell: if it works, NBC takes it all; if not, NBC walks and Versant is left a “tier four media asset.” “It’s very hard to say there’s any reason for them to really exist after that” — though CNBC is a genuinely good property with digital optionality like GolfNow.
Alex is blunt: the Versant strategy is “not sound at all… done for the wrong reasons,” and he’s followed Comcast long enough “to take what they say at face value as opposed to attributing any galaxy-brain thinking to it.” Andrew supplies the absurdity: a unit inside NBCUniversal inside Comcast supposedly can’t spend $50-100M on digital long-term thinking, “but it does if we’re a standalone small piece.”
Both question why Netflix didn’t just bid for all of WBD, linear included — Andrew: drop their NFL game onto TNT for the 70-year-olds, run Stranger Things reruns all day. “It just seemed like it would have been fun.”

11. Disney’s Walmart problem and the NFL bidding apocalypse

Alex’s frame for Disney, with a new CEO a couple of weeks away: like Walmart, “when these huge companies miss a major change in the business, just how long it takes and how costly it is to truly get back to even level footing — it’s really seared in my brain.” Entertainment DTC “has successfully made the turn”; the US sports side hasn’t. ESPN’s flagship launch “has probably come in a little weaker than I thought,” and its price point, churn around particular sports rights, password sharing and concurrent streams create significant challenges. Andrew says ESPN DTC is $30. ESPN+ “was really the wrong strategy… it cost them years.” Whether Disney goes all-in on the bundled live-rights strategy or exits live rights entirely is, to Alex, “still an open question.”
Andrew’s NFL setup for the next round: leagues “suck all the economics out” eventually, and every legacy holder is existential. Fox without the NFL “is basically the Masked Singer at that point” and can bid up to the EV of the company; CBS needs it to remain a broadcaster; ESPN would die without NFL rights but is in the best position because of its partnership with the NFL, which owns a 10% stake. Andrew expects ESPN to retain access to NFL rights in some form: “Three bidders who are basically existential on it — so just up up up up up… you’re going to see unbelievable numbers.” Alex adds that Netflix, with limited rights exposure, is “in an advantageous position in a funny way.”

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