All right, now let’s get to the main event.

Obviously, the film industry news of the last couple of weeks is all about Warner Bros. Discovery Home Entertainment and Netflix reaching a deal for the latter to purchase the former (see our coverage here at The Bits) in a winning bid that values the vaunted studio at roughly $28 a share, or a total enterprise value of approximately $82.7 billion.

The terms of this deal are that Netflix will acquire both Warner’s film and television operations, including the Burbank studio lot, as well as HBO, HBO Max, and its vast library of catalog films and franchise IP—think DC Studios, Harry Potter, etc.

Meanwhile, Warner will spin off Discovery Global—which includes CNN, TNT, and the studio’s other cable channels—sometime next year, and that company will go its own way.

Now… this deal came as something of a surprise to most people, especially given that as recently as a few months ago, Netflix co-CEO Ted Sarandos was saying that his company had no real interest in purchasing a studio.

But when Larry and David Ellison’s newly merged Paramount Skydance made an aggressive bid to acquire Warner Bros., it’s clear that WBD CEO David Zaslav used that offer to entice other potential buyers into engaging, including Netflix and Comcast.

Naturally, in the wake of the Netflix deal news, there have been quite a lot of hot takes shared online, in the media, on social media, and among film and physical media fans, including some that are very heated indeed.

But while I’ve been reporting on this industry for nearly 28 years now, rather than simply coming out with my own hasty spiel, I wanted to take some time in forming my opinion, and to really think about all the critical factors at play. I also wanted to reach out to my fellow industry insiders—friends, colleagues, and longtime sources—to gather as much data as possible and to compare their thinking with my own.

So I’ve spent most of the last week talking to people. And I’m glad I did, because while there is definitely a popular prevailing opinion about this deal online, I’ve discovered that the consensus of my industry peers tends to mirror my own thinking on the topic.

That said, here’s my take: I believe that if the future of Warner Bros. comes down to a binary choice of being purchased by either Netflix or Paramount Skydance, Netflix is probably the least bad of those two outcomes.

But we must acknowledge the fact that Warner Bros. being an acquisition target rather than a financially stable company is already the bad outcome, and it’s the result of a lot of bad decisions made by a lot of bad leadership in the not so recent past. We also have to acknowledge that the future of the film business—and by extension the physical media business—is… I don’t want to use the word ‘bleak’ necessarily, but it’s not going to be as robust as it once was. Expensive movies and TV series just don’t have the primacy in our culture that they once did—they’re competing now with (and losing to) user-generated content online, especially on YouTube and TikTok. And going forward, more and more of that content is going to be made by AI, rather than by trained and/or union craftspeople.

That is the hard reality this industry must face.

Now… before I continue, let me first say a few words about the third reported player in this contest: Comcast.

At the moment, it doesn’t appear that Comcast was anything more than a casual bidder, though that could certainly change. The reality is that, from both a regulatory and market perspective, Comcast is probably the ideal buyer for Warner Bros. on paper. The company already owns NBCUniversal, which is closely partnered with Warner on many fronts (including their Studio Distribution Services physical media operation). And while combining HBO Max (the fourth largest streaming service globally) with Comcast’s Peacock (currently the tenth largest) would certainly result in a more robust streaming competitor for Netflix and Disney+/Hulu, it would not create an anti-consumer behemoth.

Unfortunately, Comcast already has significant debt, and adding Warner’s own debt to this would be precarious. For this reason, Comcast’s offer for Warner Bros. was reportedly more based in stock than cash, thus putting them at a disadvantage in the bidding. Moreover, merging Comcast’s substantial cable and broadcast networks with Warner Bros. Discovery’s similar broadcast/cable portfolio would pose massive regulatory hurdles. So it seems that Comcast was never really in serious contention.

As for Netflix (currently the global leader in streaming), many have raised concerns about their purchase of Warner Bros. due to the fact that merging Netflix with HBO Max would result in absolute market domination in the streaming industry. A second concern is Sarandos’ own past statements about the theatrical business being antiquated, and a third (at least in the eyes of physical media fans) is the fact that Netflix doesn’t allow any of their original film and TV product to be released on disc.

But Netflix has responded to these criticisms by claiming that both Warner Bros. and HBO Max will be allowed—at least in the near future—to maintain their independence. Warner’s theatrical slate of films will reportedly continue to be released in theaters and while Netflix might add HBO Max content to its lineup, the latter will also continue to exist on its own.

As for physical media, the belief from those I’ve spoken with inside the industry is that Warner will continue to release their films on Blu-ray, DVD, and 4K Ultra HD discs just as they always have. I should add here, I’ve also confirmed that the Warner Bros. Discovery Home Entertainment and Warner Archive slates for 2026 are already locked, and production is well underway for early Q1 and Q2 titles.

And while it’s easy for people to forget today: Netflix began as a physical media company! What’s more, many of those I’ve spoken with who are guild members report that when they get Netflix originals for awards season consideration, they come in very nice physical disc editions. So the company certainly hasn’t forgotten its roots.

Now, to be clear… in order to make this calculation work, one obviously has to take Netflix at their word. That is not something that many industry observers are inclined to do at the moment. It’s also true that—deal or no deal, promises or no promises—things can and will change in the future. All it takes is one change in leadership, or yet another new buyer (which we’ve seen happen to WB in the past), and suddenly the whole plan goes out the window.

But from a physical media standpoint, there are early indications that Warner Bros. Home Entertainment, HBO Max, and the Warner Archive Collection’s physical media output will continue undiminished for at least the next 12-24 months.

What’s more, Netflix gains a production studio in this deal—something it doesn’t already own—not to mention a vast library of great catalog content and IP that it can exploit on its own streaming service. And that is very good for the continued existence and continuity of Warner Bros. as a functioning Hollywood studio, with a highly trained staff of creative employees, and an important human storehouse of institutional knowledge.

Keep that point in mind as I continue, because it’s critical.

Now let’s take a look at the potential outcome of Paramount Skydance acquiring Warner Bros….

The Ellisons have now made an aggressive hostile bid to try to break Netflix’s deal with Warner Bros., which pencils out at $30 per share for a total valuation of approximately $108 billion.

(Note: You can view the details of their pitch on the website they’ve created for this purpose: StrongerHollywood.com.)

So what would the future look like for Warner Bros. under the Ellisons? Well, let’s look at their track record.

They’ve already purchased a production studio in Paramount, as well as a storied Hollywood lot, so they don’t need another. The first thing Skydance surrogates did when they arrived at Paramount was to begin cutting operational costs at the studio. As a direct result of this effort, some 15% of the studio’s global workforce was fired in 2024 in the run up to the Skydance merger. And after the deal closed, an additional 10% has apparently been laid off.

What does that look like in actual reality?

Well… I can tell you that Paramount Home Entertainment has effectively been gutted. After a series of catalog licensing deals with boutique labels in 2024, nearly the entire home entertainment staff on the Melrose lot was laid off, and a hasty distribution deal was signed with Alliance Entertainment.

In the event it’s escaped anyone’s notice, it’s revealing that no new 4K film catalog titles have been unveiled since Spielberg’s Minority Report and Catch Me If You Can. There are lots of repackaged titles, yes, but nothing new. That’s because while Alliance can repackage existing titles, they don’t currently have the capability to author and produce new ones. So unless and until that changes, it’s unlikely that we’ll see new 4K catalog titles from Paramount directly. (Note that TV titles are different, as they’re produced separately by CBS.)

Here's one of my concerns: The studio’s choice to deep-six its physical media operation was surely approved by the Ellisons, or at least their surrogates. And that strongly suggests to me that physical media is simply not a priority for Paramount Skydance going forward.

But here’s my greater concern: It wasn’t just physical media that was gutted at Paramount! Lots of other studio divisions were eliminated or heavily downsized too, all in an effort to recoup some $3 billion in cost savings from their purchase deal.

So what does all of this suggest about what the Ellisons would do with Warner Bros. should they get their hands on it? We don’t have to guess, and you don’t have to take my word for it: It’s spelled out directly in the documents they’ve shared on their Stronger Hollywood website!

Take a look at the Paramount Press Release you can download from the site, which says:

“Combined business will execute on a $6+ billion cost synergy opportunity, in addition to the more than $3 billion in standalone cost efficiencies that Paramount expects to achieve in its current transformation plans.”

Take a look at the Investor Presentation, which adds that their plan would:

“Realize over $6 billion in run-rate combination efficiencies by 2029”

What do these terms—cost synergy opportunity and run-rate combination efficiency—mean exactly? They refer to the practice of eliminating overlapping functions when two companies merge by reducing headcount, eliminating departments, consolidating facilities, and otherwise streamlining operations.

The Ellisons don’t need two production studios, nor two Hollywood studio lots. They don’t need two theatrical divisions, nor two restoration departments. They don’t seem to need even one home entertainment division, much less two!

All the Ellisons seem to want from a Warner Bros. bid is the studio’s franchise IP and catalog, HBO Max (to bolster their own Paramount+ position), and perhaps CNN (for Washington regulatory approval).

Translation: They’re going to field dress Warner Bros. like a buck and hang its head over their mantle. You simply don’t get to $6+ billion in cost synergies any other way. They’re going to lay off thousands of employees on the Burbank lot and sell off its parts.

And for a studio that is widely regarded as the crown jewel of Hollywood, with over 100 years of storied history, that outcome is simply unacceptable.

Bottom line: Why would we expect the Ellisons to treat Warner Bros. in any other than the way they’ve already treated Paramount?

The Paramount lot has essentially become a ghost town for many reasons over the last several years, but not the least of which is the impact of all the recent layoffs. (See this NY Times article, published just yesterday, about the sad reaction of visitors touring the Melrose lot.) Meanwhile, I was just on the Burbank lot a couple of months ago, and there’s still plenty of activity there… at least for the moment.

[Editor’s Note: If David Ellison feels different about physical media (read: 4K disc) than I assume, I’d love to know about it. And honestly, I’d have a lot more confidence in the new Paramount Skydance if they could un-fuck Star Trek and create a new Star Trek Studios, led by someone who actually understands the franchise, to guide both its film and TV incarnations going forward. Terry Matalas? Ronald D. Moore?]

Ultimately, here’s the deal… Warner Bros. is for sale to the highest bidder, and that’s a tragedy.

Hollywood is in a sorry state of affairs, both in terms of its theatrical business and its physical media business, and that too is a tragedy.

I guess the bottom line is that I would rather see an outcome that at least offers the hope of preserving Warner Bros. as a functioning film studio—and the Burbank lot as a functioning place of production, institutional knowledge, and film preservation for future generations—than see it plundered by those who just want to put their stamp on Hollywood because they’ve got the money to do it.

(To quote Stephen today: “It’s like having to choose between Fat Man and Little Boy. Both are destructive, so the best that you can do is hope for the one with the lower yield.”)

But that’s just my two cents. As always, your mileage may vary.

Feel free to share your thoughts on our social media (X/Twitter, BlueSky, and Facebook, as well as my own linked below)—we’d love to hear from you!

- Bill Hunt

(You can follow Bill on social media on X/Twitter, BlueSky, and Facebook, and also here on Patreon)