Could Netflix Have Another Surprise Up Its Sleeve in Its Pursuit of a Studio?

At the moment, the Paramount-Skydance and Warner deal appears to be at a deadlock for at least another year. Meanwhile, Ellison’s studio is already carrying debt approaching $17 billion. If the Warner acquisition is ultimately completed a year from now, that debt would surpass $80 billion when Paramount’s existing debt, the cost of the acquisition, and Warner’s own debt are combined.

Netflix, by comparison, currently carries around $14 billion in debt. The company has never fully paid it down, largely because of a financial architecture that would require far more than a short article to explain. However, thanks to the stable and recurring revenue generated by its millions of subscribers, Netflix has managed that debt comfortably for years.

If the Paramount-Warner deal ultimately collapses, Paramount would be required to pay roughly $9 billion, in addition to nearly $2 billion that it is already obligated to pay as additional compensation to Warner shareholders. It’s worth remembering that Paramount itself was acquired for $8 billion.

Streaming consumption remains massive, but its growth is no longer as explosive as it was just a few years ago. One clear sign is the sharp decline in original production. As The Hollywood Reporter noted today, the number of new streaming releases has fallen 65% from its 2021–2022 peak. Meanwhile, free ad-supported streaming services such as Tubi, Pluto TV, and Roku continue to expand rapidly, while YouTube has firmly established itself as the dominant content platform without having to produce that content itself.

A few weeks ago, Fox acquired Roku, another sign of how the media landscape continues to evolve within this unusual balance between technology and entertainment.

What Netflix’s next move will be remains a mystery. But it increasingly feels as though one of Hollywood’s major players will have to rethink part of its long-term strategy.

Just to indulge in a bit of speculation, it would certainly be fascinating if Netflix ultimately acquired Paramount Pictures from the Ellison family while leaving them with the television business and the rest of their media assets, including CBS, MTV, and Nickelodeon. It would resemble the transaction through which Disney acquired 20th Century Fox while separating other assets. Could it happen? At the moment, it seems highly unlikely, particularly because it would represent a deeply humiliating defeat for one of the wealthiest families in the world.

Other rumors point to Comcast potentially selling Universal. And then there’s Sony, somewhat in a league of its own, but with the advantage of having done its homework after the last decade’s crisis by restructuring the studio into a far stronger financial position than many of its competitors.

Overall, the feeling is that, rather than another wave of mega-acquisitions, many of today’s moves may instead point toward the breakup of large media empires—much like Comcast potentially separating Universal from the rest of the company. That could ultimately represent the future of Hollywood, and perhaps even part of its salvation.

One way or another, every major media company is now closely watching the legal battle over the Paramount-Warner transaction, because its outcome is likely to establish the framework for the next generation of mergers and acquisitions across Hollywood.

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