Another voice raising a warning about the bidding war battle to purchase Warner Bros. Discovery from Hollywood's home state. 2.5 hours ago, California Attorney General Rob Bonta demanded Netflix and Paramount Skydance's proposed mergers must receive a full and robust review because further consolidation and market central to economic life does not serve our economy, consumers, or competition. In fact, consolidation of markets, he continues, has led to increased unaffordability, loss of good-paying job opportunities, and fewer choices for consumers.
His comments after Terminator director James Cameron, whose films made $10 billion, sent up a warning flare last night specifically about Netflix's all-cash deal for Warner Bros. Discovery.
Mike Lee, the chairman of competitive policy and consumer rights, wrote the business model of Netflix is at odds with the theatrical film production and exhibition business which employs hundreds of thousands of Americans. Fewer films will be made. Service providers such as visual effects companies will go out of business, job losses will spiral.
Joining me in his first reaction to that letter and the latest developments is Netflix Co-CEO Ted Sarandos. Thanks for being on the show. Quite the poison pen letter James Cameron wrote. He did say Mr. Sarandos, but he's endorsed Paramount's bid and Netflix origin would be a disaster. What is your response?
If you are surprised by that letter, I met with James personally in late December and laid out our 45-day commitment to theatrical exhibition films, talked about that commitment in the press countless times, swore under oath that is what we would be doing. So I'm surprised and disappointed James chose to be part of the Paramount disinformation campaign that's been going on for months.
He flat out said you guys are pledging theatrical release window of 17 days, which he called ridiculously short. I heard you say it's 45 days. Clarify here.
45 days of theatrical exclusivity. That has been clear from the beginning. I never uttered other words. I don't know where it came from. I responded early this morning, we will see where he goes.
Another of his stated concerns: if Netflix prevails, you will winnow down the current 15 movies per year released to theaters, which would be a death knell to theater operators and creators. Is that true?
We will keep Warner Bros. film and television studio running, 45 days, healthy robust slate of films, that will continue. This deal is contingent on that. That is priced through the deal that Warner Bros. made last year. We want to win on that threshold and keep investing on it. They opened their ninth number one movie in a row. It is the alternative. Paramount has vowed to cut $6 billion out of that business. If they do the math, they have also vowed to deleverage the business from where it is going to be down to 2.5 times. They would have to cut $16 billion out of the company in very short order. If you look at that and say where do you make $16 billion of cuts, you only do that in production of people, cutting jobs. One thing Netflix, I'm very proud of our track record, production in America, creating jobs. Our productions created 150,000 jobs in America. $250 billion in economic impact and we are vowing to invest like we have in Netflix in the last 25 years.
I don't know what is wrong with how you're messaging this. We look at the numbers. You've not only created jobs, but New Jersey is right across the river. You've broken ground on a billion-dollar expense to create 12 soundstages and hire a lot of people. Will feature films be shot on those soundstages? The Hollywood elite.
There's a picture breaking ground with Governor Murphy. It competes, they will strengthen the American economy. It isn't just a production but the transportation industry. The different things, dry cleaners, all those American businesses that support production around the country. We will film a lot since we passed that incentive, 7 projects were supposed to shoot overseas moved back to America. We have ambitious production going on already. 11 films in New Jersey. We are thrilled these are to invest in American jobs. In the alternative, the Paramount deal floating around out there, misinformation swirling around it is guaranteeing to cut jobs, guaranteeing to make gigantic cuts to the entertainment industry in the alternative, growing growing growing and they are promising to cut cut cut.
All of Hollywood has been pushing the refresh button and it will be all weekend long, waiting on Paramount Skydance's final offer. He will out a 7-day window to be opened even though you had a deal with Warner Bros. Discovery. You have the deal, you won, you're a tough negotiator. You have the deal. Why give them this last shot?
It offers the most value and long-term Netflix as well. So confident we wanted to deliver to shareholders absolute confidence and certainty. If there's another deal floating out there, take the 7 days and better understand it and get this done. The market doesn't like uncertainty, the industry cannot grow, we want to grow this business.
The 7-day window is up Monday. Have you heard? Any idea whether it will come before the business day or the weekend or will they wait until the last second? What would you do?
