This story was originally published in On Background with Mark Stenberg, a free, weekly newsletter that explores the key themes shaping the media industry. You can sign up for it here.
Last month, the deal that was supposed to reshape Hollywood fell apart.
After a protracted, highly visible bidding war for Warner Bros. Discovery, Netflix ultimately walked away from the tie-up, forcing Paramount to pay $110 billion for the asset and fork over a $2.8 billion break-up fee to Netflix.
Now, with cash in hand, its stock price rising, and access to an already formidable war chest, the real question is what comes next for the streamer.
The easy answer is nothing. Netflix is the most profitable company in streaming, having generated roughly $13 billion in operating income last year. It has more than 325 million subscribers and no urgent problems to solve. Plus, according to Oaklins DeSilva+Phillips senior advisor Erica Gruene, the history of major media deals is not exactly an advertisement for doing them.
“If you look at the history of media transactions, it’s basically a warning against it,” Gruene said. “They often destroy a lot more value than they create.”
