Feb 19, 2026

Welcome back to What I’m Hearing, a little shorter tonight (thankfully), and with a special treat: highlights from my talk with Netflix’s Ted Sarandos as he seeks to fend off Paramount in the newly reopened auction for Warner Bros.

Mentioned in this issue: Ted Sarandos, Amy Pascal, David Zaslav, James Franco, Lisa Taback, Mike Lee, Mikey Ireland, Scarlett Johansson, Seth Rogen, Michael Lynton, Ben Lloyd-Hughes, Jesse Ehrman, David Ellison, Fred Melamed, Albert Cheng, Ana Cruz Kayne, Ted Sarandos, Nancy Meyers, Pouya Shahbazian, Emma Mackey, Joshua Steiner, James Cameron, and… failures, misjudgments, and mistakes.

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Let’s begin…

Thursday Thoughts…

HBO Max’s starring role… on Netflix: Amid all the Warner Bros. sale drama, did you see the latest Nielsen streaming chart? Four Warners series (The Closer, Southland, Rizzoli & Isles, Teen Titans Go!) anchored the top 10 list of most-watched “acquired” shows. Not because they were big on HBO Max, where, until relatively recently, you’d probably have to watch them. They’re now being licensed to Netflix as Warner Discovery C.E.O. David Zaslav seeks to generate as much short-term cash as possible, rather than build the value of HBO Max. This strategy, combined with the fact that the Warner Bros. studio didn’t release a single movie in theaters in the fourth quarter of 2025, thus saving tens of millions in marketing costs, says a lot about how this company is being managed as it sits in Netflix vs. Paramount purgatory. And of course, Netflix is collecting valuable data on how that coveted WBD library performs on its platform.
Speaking of HBO Max and acquisitions…: Heated Rivalry, the horny hockey drama that HBO Max picked up from Canada, has turned into a decent subscriber-acquisition tool in the U.S. for the platform, per new data from Antenna—though, with apologies to your social media feeds, it’s not nearly as big as other HBO Max hits, albeit at a much lower cost…

And speaking of Warners…: Congrats to Mikey Ireland, the former Paramount film chief who landed at Warner Bros. running production with Jesse Ehrman. Yes, he’s now at another company targeted by David Ellison, which gives Ireland the unique opportunity to possibly get fired by the same guy twice. Such is Hollywood in 2026. In the meantime, the first order of business is finding a replacement for Emma Mackey, who was set to star in the big Nancy Meyers rom-com that Warners recently picked up. Mackey, who had replaced Scarlett Johansson in the pricier Netflix version of the project, just dropped out, I’m told.
Breaking: Studio head wanted to be cool like movie stars: Michael Lynton, the former C.E.O. of Sony Pictures, co-wrote a new book, and refreshingly, it’s not about his own accomplishments. From Mistakes to Meaning: Owning Your Past So It Doesn’t Own You, co-written with former Clinton official Joshua Steiner, delves deep into the misjudgments and failures of others and themselves. Specifically, the Sony hack, which happened on Lynton’s watch. He now accepts blame for the infamous 2014 cyberattack because, he writes, he was seduced by the filmmakers and studio head Amy Pascal into greenlighting The Interview, which enraged North Korea. “I was trying to belong,” Lynton writes of a table read with Seth Rogen, James Franco, and other creatives. “My desire for affirmation overcame all the years of professional training.” Lots to say about this one, so Lynton will be on The Town tomorrow.

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An A.I. movie with guild-approved synthetics: This week’s flurry of Seedance 2.0 cease-and-desist letters from studios and streamers seems to have brought a fresh bout of A.I.-inspired despair to Hollywood, even as the studios quietly beef up their capabilities. Amazon executive Albert Cheng, for instance, is building a small army to deploy A.I. across the studio. One new hire sent an announcement email today boasting she’d “joined Amazon’s AI Studios as a Principal Creative Executive on the Live Action team.” That title alone contains about 10 red flags… and her job duties? “Marry human-centered storytelling with emerging GenAI tools,” she wrote.

Meanwhile, in a bit of good news, the A.I. production company Staircase Studios, led by producer Pouya Shahbazian, just completed a short film (watch here), and it features a SAG-AFTRA–approved cast playing synthetic characters, including veteran scene-stealer Fred Melamed. Reps for Melamed and co-stars Ben Lloyd-Hughes and Ana Cruz Kayne negotiated deals just like for a guild-approved animated or live-action film.
Box office over/under: A Lionsgate faith-based sequel called I Can Only Imagine 2 is the only wide opener, so let’s not.

Now for the big takeaways from my Ted talk…

Ted Sarandos Hits the Mattresses on the 45-Day Window

As Warner Bros. gives Paramount another week to raise its bid, Netflix’s unflappable co-C.E.O. shares his thoughts (and makes some promises) about movie releases and the entertainment business in a post-merger world.

Matthew Belloni

Can we officially call the Warner Bros. sale a campaign yet? So far, this seven-day window of reopened bidding feels less like a disciplined M&A process and more like the final push to win the presidency (or the best picture Oscar), complete with sharply drawn narratives, strategic endorsements—and, of course, mudslinging and opposition research. No, we don’t yet know if Paramount will raise its bid beyond $31 per share for all of Warner Bros. Discovery—pretty much the only thing that matters in this auction. But we do know that Paramount’s David Ellison is screaming to Congress about the extinction-level event that would be Netflix winning Warners.

Team Netflix is responding by hitting the media and analysts circuits hard, pushing back on what co-C.E.O. Ted Sarandos calls Paramount’s “flooding the zone with misinformation.” (Note to Sarandos: At this point, why not just put your ace awards campaigner, Lisa Taback, in charge of the Warners messaging? The D.O.J. will be voting for Netflix faster than you can say The Power of the Dog.) Even tonight, as Paramount is close to winning a preliminary D.O.J. greenlight under the Hart-Scott-Rodino Act, which governs merger review, David Hyman, Netflix’s chief legal officer, is already downplaying: “They have not secured approvals needed to close and they are a long way from doing so,” Hyman told me in a statement. Regulators have begun soliciting feedback on Netflix and the general industry landscape from everyone from theater owners to filmmakers to labor guilds—at this point, would you be surprised if Dimitri, the matre’d at Tower Bar, got a subpoena?

The strongly worded letters have also been flying. A group of Democratic senators wants to know what Ellison and Donald Trump have been talking about in private. And James Cameron, whose next film, the Billie Eilish 3D concert doc Hit Me Hard and Soft, will be released in May by Paramount, weighed in with his own missive to Mike Lee, chair of the Senate’s antitrust subcommittee. “I believe strongly that the proposed sale of Warner Bros. Discovery to Netflix will be disastrous for the theatrical motion picture business that I have dedicated my life’s work to,” Big Jim wrote in his letter (read it in full here), echoing what he told me on The Town in December. And in response, Lee told CNBC, “I look forward to holding a follow-up hearing to further address these issues.”

Phew. Amid all this, Sarandos made his case to me yesterday, detailing for the first time his commitment to specific theatrical windows, why he now thinks the Paramount deal would require $16 billion in “synergies” (meaning layoffs and cost reductions), and how he expects the March 20 shareholder vote to end with a Netflix victory. Paramount declined to respond. Listen to or watch the full chat here, but I’m excerpting some of the key points and exchanges below across various topics that we discussed.

The Post-Merger Reality

On why Netflix agreed to the seven-day window:

Sarandos: It’s giving the Warner Bros. Discovery shareholders exactly what they deserve, which is clarity.

On Netflix being too dominant if it owns WB:

How is it that we lose projects all the time in the marketplace? Remember, when I talk about a diverse marketplace, people can choose very freely between linear TV, which still has about 40 percent of TV engagement, and a sea of other entertainment choices.

On competing with YouTube and other free streamers:

The Oscars [going to YouTube] was the most recent example of that. And the Brazil NFL game. What’s happening today, you could never do before. You can upload your movie to Tubi right now and start earning ad revenue from the viewing. That didn’t exist five years ago. And that business is growing faster than all of us, in terms of the FAST video business. That’s why I’m arguing that it is a very diverse marketplace. There are multiple bidders. There’s multiple places to sell. This [acquisition] does not remove one buyer from the market. I’m going to keep Warner Bros. film and television operating largely as it is today. I’m going to keep HBO running largely as it is today—separate buyers who will continue to compete for projects.

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On whether he’d allow Netflix and Warner Bros. to both bid on Wuthering Heights, which is how filmmaker Emerald Fennell and star Margot Robbie stand to make millions if the film performs well in theaters:

One hundred percent, we go at it [internally via different divisions at Netflix] now. By the way, when you look at Wuthering Heights, I think what people miss about our movie deals is we don’t not pay back end. We pay it up front and we guarantee it.

On whether to keep the Warners model of offering upside in success:

We’re not changing anything about the Warner Bros. model of compensation for filmmakers at all.

On whether Netflix needs Warner Bros. despite having 325 million subscribers and growing operating income by 30 percent last year:

We don’t. We do think that it’s an accelerant to an already successful business model. It ensures our continued growth into the next century with Netflix. It’s that combination of their I.P. and we’ve been doing it for about a decade, they’ve been doing it for about a century. Remember, our whole business model has always been about more, not less.

On why the Netflix share price is down more than a third since the pursuit of Warners began:

I think there’s a lot of segment headwinds, and market headwinds too. And I do think the market doesn’t like uncertainty, and that’s why we put this seven-day clock on Paramount—to bring some closure to this thing, because people do not like the uncertainty. I don’t know if they do or don't like the deal, but it’s definitely a departure from our previous history, which has always been to build and never to buy. But I’d say we’re pretty good at pivoting the business when it’s time to pivot.

Promises Made…

On his promise of a 45-day theatrical window for Warners movies:

It means 45 days of theatrical exclusivity, which has been the issue that people have been mostly pushing for. [Warner movies] will go from theaters to P.V.O.D. to HBO Max. We’ve not ironed out what that is going to be, but the core thing is it’ll feel traditional in terms of how many days in the theaters and how long to get to HBO Max.

On whether he’d put that in writing:

No, because we don’t present any concentration risk in this deal. We’re 9 percent of the business, growing to 10 percent of the business. So there is no remedy to do that. But I will tell you that none of my competitors will have that in writing. We’re buying a business model, and we’re going to continue to invest in it and grow it, not kill it.

On fears he’ll say whatever he needs to now and commit to it for two to three years in order to make everyone in Hollywood feel okay. And then five years from now it will be, “Okay, Batman and Superman go to theaters, everything else goes to HBO Max”:

We’ve got a 25-year track record of delivering on [promises].

On whether he’ll spend on robust marketing campaigns:

We’ll do competitive marketing spends. But the other thing to keep in mind is our members are on Netflix a couple hours a day, every day, so the best way to talk to our members about something coming to wherever is probably on Netflix.

On whether he’ll commit to keeping the HBO advertising spend?

[HBO] will have their own marketing budget. I want them to continue to be what people fell in love with when they fell in love with HBO. And I do think that one of the challenges they’ve had over the last couple of years is trying to be jammed into becoming a general entertainment brand, which they really aren’t. And I think that’s why they wrestle with the naming mechanics. You know, is it HBO? HBO Now? HBO Go? HBO Max? Max? And I’ve said from the beginning, when they’re serious about this business, they’re just gonna go by HBO, wherever they show up.

On box office reporting:

Under oath to you, we will not eliminate box office reporting on Warner Bros. movies.

On whether he’s willing to spend more if Paramount ups its bid:

We’ve walked away many times when we needed to, and I don’t think you should expect us to behave any differently here. We think we’re in the range of where this deal has to be, and we are willing to make sure that we’re paying the right amount, and happy to see somebody else overpay for it, just like we do for every movie or every TV show we do every day.

His final pitch to Warner Discovery shareholders and Hollywood in general:

The outcome of this deal is very important to the entire industry. You go with Netflix, and we continue to grow. For the first time in a long time, Warner Bros. will be in the hands of a company with a great balance sheet that’s going to invest in its continued growth. We’re not in the business of cutting. Or you can go the other route, which is Paramount. They said they’re going to get about $16 billion in cuts to do what they’re saying.

[Sarandos is reminded that Paramount said $6 billion.]

I know they said six, but I can count. If you take a seven-times-levered business and take it down to two to three times levered, you have to cut $16 billion out of the business. And that’s what they’re saying they’ll do in a very short time frame. Remember, they’ve already taken $3 billion out of Paramount. So again, this is cutting, cutting, cutting, where Netflix is growing, growing, growing.

On the downside that the deal will create a behemoth streamer with 400 million subscribers:

…Who has grown the entertainment business enormously in the last decade.

See you Monday,
Matt

Got a question, comment, complaint, or some extra mud to sling? Email me at Matt@puck.news or call/text me at 310-804-3198.

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