‘There Was No Good Outcome’

In the hours after Netflix (NASDAQ:NFLX) walked away from its bid for Warner Bros. Discovery (NASDAQ:WBD) on Thursday, clearing the path for Paramount Skydance’s (NASDAQ:PSKY) $111 billion takeover of one of Hollywood’s most storied studios, a prominent film critic was already calling it a disaster in the making.

On the latest episode of “The Big Picture” podcast, host Sean Fennessey offered a blunt verdict: “There was no good outcome in this sale. The history of Hollywood studio mergers and acquisitions is littered with creative roadkill.”

Netflix co-CEOs Ted Sarandos and Greg Peters announced Thursday they would not raise their offer to match Paramount’s revised $31-per-share bid after the WBD board declared it “superior.” The streaming giant said the deal was “always a ‘nice to have’ at the right price, not a ‘must have’ at any price.” Paramount’s winning bid values Warner Bros. Discovery at approximately $111 billion — and hands David Ellison control of the studio behind “Succession,” “Oppenheimer,” “The Sopranos,” and CNN.

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Fennessey’s central argument is that Warner Bros. never needed to be sold at all.

“It’s a great business with enough viable properties to sustain another century of film, TV, and any other forms of media,” he said. “But the people who bought the company in 2022 bought it to sell it” — a damning framing of the deal as a corporate flip of a crown jewel rather than a strategic vision for its future.

That’s a reference to the 2022 merger that created Warner Bros. Discovery, when AT&T spun off its WarnerMedia assets and combined them with Discovery Inc. under CEO David Zaslav.

He invoked the Disney-Fox merger of 2019 as a cautionary tale. “Look at the Fox Disney deal from 7 years ago and ask yourself if that helps movies in any way. This one could be significantly worse.” These deals, he argued, “tend to favor corporate synergies over creative risk taking” and “shrink the number of people who get to work in the movie business.”

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The political dimension of the deal is where Fennessey’s alarm is loudest. Ellison will now oversee not just the studios behind “Game of Thrones,” “Barbie” and “Dune,” but CNN, HBO, and CBS — a network already under scrutiny for what the podcast described as a “pivot rightward and in the direction of President Trump.”

“He’ll now have CNN and HBO under that same watchful eye,” Fennessey warned.

That concern extends well beyond podcast commentary. Ellison attended Trump’s State of the Union this week as a guest of Senator Lindsey Graham, while Sarandos was reportedly at the White House on the very day Netflix dropped out.

On whether Ellison’s Skydance is equipped to steward a legacy stretching from “Casablanca” to “Harry Potter,” Fennessey was candid: “Skydance’s track record as a tastemaker is iffy at best.” The company produced “Top Gun: Maverick” and “True Grit” — but also a string of forgettable streaming action films. “Sometimes you’re a genius,” he said, “sometimes your taste leads you to the bottom of the barrel.”

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At this price, he added, over-leverage is a real danger: “it’s not hard to see a world in which Paramount is overleveraged by debt… with any number of unfortunate and ugly outcomes.”

Fennessey argued Netflix may have made the shrewdest move of all. “Netflix may have just played the most successful game of chicken in the history of modern media. It lost the battle for Warner Brothers, but almost certainly won the long term fight for primacy.”

Netflix shares surged more than 13% in after-hours trading on Thursday and were up over 7% at $90.64 before the bell on Friday.

The deal still faces regulatory review, with a Senate Judiciary Committee hearing scheduled for March 4.

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This article Hollywood’s Worst Deal Ever? Critic Sounds Alarm On Paramount’s $111 Billion Warner Bros. Win: ‘There Was No Good Outcome’ originally appeared on Benzinga.com