Breaking news, yet another voice raising a warning this afternoon about the bidding war battle to buy Warner Brothers Discovery. This one coming from Hollywood's home state. About two and a half hours ago, California Attorney General Rob Bonta issued a statement demanding that both Netflix and Paramount Skydance's proposed mergers must receive a full and robust review because further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition. Well, in fact, consolidation of markets, he continues, has led to increased unaffordability, a loss of good-paying job opportunities, and fewer choices for consumers. His comments come after legendary Titanic, Terminator, and Avatar director James Cameron, whose films have made more than 10 billion dollars at global box offices, sent up a warning flare last night, specifically about Netflix's 82.7 billion all-cash deal for Warner Brothers Discovery. In a letter to Utah Senator Mike Lee, who's the chairman of the Subcommittee on Antitrust, Competitive Policy, and Consumer Rights, Cameron wrote, quote, 'The business model of Netflix is directly at odds with the theatrical film production and exhibition business, which employs hundreds of thousands of Americans. Theaters will close. Fewer films will be made. Service providers such as visual effects companies will go out of business. The job losses will spiral.' Joining me now in his first reaction to that letter and the latest developments is Netflix co-CEO Ted Sarandos. Ted, thanks for coming on the show.
Oh, thanks for having me on.
Quite the poison pen letter James Cameron wrote. He did say, I have the letter, he did say Mr. Sarandos is a good person, but he outright has endorsed Paramount's bid and that Netflix ownership, he said, of WBD would be a disaster. What is your response to Jim Cameron?
Well, look, if you think you were surprised by that letter, I was particularly surprised. I met with James personally in mid-late December and laid out for him our 45-day commitment to theatrical exhibition of films and to the Warner Brothers slate. I have talked about that commitment in the press countless times. I swore under oath in front of the Senate subcommittee on antitrust that that's what we'll be doing. So, I am particularly surprised and disappointed that James chose to be part of the Paramount disinformation campaign that's been going on for months about this deal.
Yeah. One thing in his letter, he flat out said that you guys were pledging a theatrical release window of just 17 days, which he called ridiculously short. I have heard you over and over say it's 45 days. Can you clarify here and now?
That's 45 days of ex-theatrical exclusivity. That has been clear from the beginning. I have never even uttered the word 17-day window. So, I don't know where it came from or why he would be part of that machine. I responded to Senator Lee's letter this morning. So, we'll see where he goes.
You know, another one of his stated concerns, pretty much the chief concern, that if Netflix prevails, you guys will winnow down the current 15 movies per year WBD releases to theaters, which he said would be a death knell to theater operators and creators. Is that true?
Again, an ironic claim considering that in the alternative to our deal, we will keep the Warner Brothers film and television studio running largely as it is today. Movies going to the theaters for 45 days, a healthy, robust slate of films every year. That is going to continue. This deal is contingent on that for it to work. All of that is priced into the deal. The four billion dollars of theatrical revenue that Warner Brothers made last year. We want to keep winning on that track, on that threshold, and we want to keep investing in it. You know, they just opened their ninth number one movie in a row. They know exactly what they're doing here and we want to continue that healthy business. It is in the alternative. Paramount has vowed here to cut $6 billion out of that business. Now, if you do the math, they've also vowed to delever the business from where it's going to be six to seven times down to two and a half times. And to do that, they would have to cut $16 billion out of that company in very short order. Now, if you look at that and say, where are you going to make 16 billion dollars worth of cuts? You can only do that in production and people, cutting jobs. And one thing that Netflix has been, I'm very proud of our track record on production in America, creating jobs. Our productions have created 155,000 jobs in America. 250 billion dollars of economic impact in America from our production. And we're vowing to continue to invest in that like we've been investing in Netflix for the last 25 years.
You know, I don't know if there's something wrong with how you guys are messaging this out there because we do look at the numbers. You have not only created jobs, but I mean, New Jersey's right across the river here. You've broken ground on a billion dollar expense to create 12 sound stages and hire, I would imagine, a lot of people. Will actual feature films be shot on those soundstages? I mean that to me, you could put that out there if it's true and that some of the Hollywood elite.
We have been putting it out there. There's a picture of us breaking ground on this ceremony with Governor Murphy. We put together a production incentive in the state of New Jersey that competes with every other country in the world that will strengthen the American economy. You know, people forget this is a gigantic business. This isn't just the production, but it's also the hospitality industry, the transportation industry, the catering, all the different things, dry cleaners, all those American businesses that support production all around the country. We are doing a lot. We're going to film a lot in New Jersey. Since we passed that incentive, we've moved seven projects that were supposed to shoot overseas. We've moved back to America and are shooting here. And we have a very ambitious slate of production going on there already. 11 films right now in production in New Jersey. So, we're incredibly thrilled that these are, you know, to invest in America and invest in American jobs. And again, in the alternative, the Paramount deal that's floating around out there and all the misinformation swirling around it is guaranteeing to cut jobs. They're guaranteeing to continue to make gigantic cuts to the entertainment industry. And then the alternative, we're growing, growing, growing, and they are promising to cut, cut.
Listen, all of Hollywood has been pressing the refresh button, and they will be all weekend long. They're waiting on Paramount Skydance's final offer. You allowed a 7-day window to be open once again even though you had a deal with Warner Brothers Discovery.
You have the deal. Ted, you won. You're a tough negotiator. You had the deal. Why give them this last shot?
Look, first we're very confident in the bid that we have that it offers the most value to Warner Brothers Discovery shareholders and the best long-term value for Netflix as well. So confident that we wanted to make sure that we could deliver to Warner Brothers Discovery shareholders absolute confidence and certainty about this deal. If there's another deal floating out there, take this seven days and better understand it and then come back and let's get this thing done. The market doesn't like uncertainty. The industry cannot grow with a lot of uncertainty. We want to grow this business.
Well, that 7-day window is up on Monday. So, have you heard, have you had any idea whether it will come before the end of business day today ahead of the weekend? Will they wait till the last second? What would you do if you were the Ellisons?
I've left this for the Ellisons to work out with Warner Brothers Discovery. We're moving on business as usual. We are deep into the regulatory process with the DOJ, with the European regulators, with regulators around the world, and with state AGs to move this process along. It's, I'm glad that there is this process. You know, it's very important I think to scrutinize a deal of this size, scrutinize the buyer and the seller, make sure that the industry is going to stay healthy, and make sure that we can keep moving forward and growing this industry in a healthy way. So I'm glad that they are doing the scrutiny. It does take a long time. And it happens at many levels, locally, domestically, and internationally.
