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Welcome to our Bloomberg television and radio audiences around the world for an interview with Netflix co-CEO Ted Sarandos. Ted, the less than straightforward question that everyone has of course is what happens next. But I wanted to put it to you like this: Does Netflix have the balance sheet, the sort of financing flexibility, and the will really to amend, improve, boost its bid for Warner Brothers Discovery's studios and streaming business if needed?
And let me tell you, we feel very good about the position we're in right now. So we said we've done, we've, this process opened up, Warner Brothers Discovery determined that it was in their strategic best interest to sell these assets. We entered into a negotiation with a very clear bidding process that they laid out for us, which we followed and won that bid. I think in the alternative, this guy has gone, you know, missed every deadline. They've been taking nine runs of this bid and they risk, you know, they're not seem, they just won't accept this outcome. So, what we've done here is we've given Warner Brothers Discovery a 7-day window to get some clarity about what Paramount is offering for this company. I believe that it's important to have that clarity. I think it's important that the Warner Brothers Discovery shareholders deserve to have that certainty and clarity about this deal.
Now, your stock is down more than 30% since you announced this deal. So, you feel good about it, your shareholders, it's a little less clear. I know that I've heard you say that that is because of uncertainty, but it went down basically as soon as you went into this. So, I'm just wondering, is there a point at which it goes down so much that you and your fellow board members have to reconsider if this is the right path?
Lucas, remember, we run this company from the beginning for the long term. But we think this deal will have a positive impact on the business for the long term. Remember what we're doing in buying these assets is we've been creating original programming on Netflix for about a decade. They've been making original film series for about a hundred years. They have incredible IP and we just happen to have a consumer model that can better maximize the returns on that IP. So, I think it's a very, it's a great long-term outcome. I think there has been some headwind in the stock. There's been some headwind in the sector and there's been some headwind because of the AI trade, which I think is ironic because I think AI will be an amazing creator tool to actually make the entertainment business bigger and better than ever. So, I do think those things have got to play out. When I said they don't like uncertainty, there's, you know, there's concern about bidding wars and all those things. And we have always been an incredibly disciplined buyer and we will continue to be one here.
Ted, on those headwinds you mentioned, you know, that there are a portion of the Netflix investor base and the Warner Brothers Discovery investor base that kind of see this as defensive by you and look at growth, right? You know, engagement growth in the second half of last year, such as it was. What would you say to those people that this is a response to that growth rate that you've experienced more recently as opposed to something proactive and strategic?
Well, I think that they're incorrect. They're reading it wrong. I'd say that we, if you look at our, the year we just came out of in 2025, we grew revenue 16%. We grew operating income by 30%. And our engagement did go up. We went up a couple billion hours and I feel like, you know, there's engagement, which is an important, you know, view hours is one component of engagement and it's certainly one component of the value of engagement. We're very confident, you saw that in our '26 guide, that we're going to continue to operate this business well and that this model very much works and that this Warner Brothers acquisition is an accelerant to that model. And it also future-proofs that model, you know, for decades to come.
Ted, I appreciate there's a process here and thank you, you know, kind of earlier for outlining it right through February 23rd, but before that, you know, the section of the investor base that basically thinks Netflix should walk away, look at the regulatory road ahead, they look at the integration risk and then like what Netflix is, a big global technology company as opposed to being something sort of micro focused on Hollywood, right? And so answer those investors, right? You know, why are they wrong that actually there is a longer list of reasons to walk away than stick with it at this juncture?
Well, this deal offers great value to the Warner Brothers Discovery shareholders, it offers great long-term value to Netflix. We have a normal regulatory path ahead. There's nothing uniquely challenged about that process. We are about in the middle of it with the DOJ, with the European regulators, with regulators all over the world and with states attorney general. This is a process that we're very confident that we're going to navigate. And in fact, I'd say again when you look at these deals that are out there, I think people would like the status quo. And we have a long history of running the business well and pivoting when it's time to, and adding new business lines to the business that people get upset about sometimes and then when we do it successfully, they're thrilled. I think advertising probably is the most recent example. Live could be a more recent example. Some of our live sporting events could be a more recent example of things that have been pivots in the business that have gone on to grow the business very well and people are very happy about it. People don't like change. They don't like any degree of uncertainty sometimes and anytime there's a new deal, there is regulatory scrutiny. There is execution risk. All those things but we are highly confident that we're going to bring this deal close and that we're going to successfully integrate the business. And I think about it as the reason why we're not talking about these deals so much this week. We've granted the 7-day window to get some clarity about the Paramount deal because Paramount has been out spreading a lot of misinformation to shareholders and to the markets and to regulators in ways that have run the narrative state of confusion. We're trying to say we'll take seven days and get some clarity. Because what we believe is, and what the Warner Brothers Discovery Board agrees with us on as well, is that our deal is a superior deal. We believe it's good for them. We know it's good for us and we're excited about getting it done.
When you talk about kind of clarity and certainty, you know, one of the aspects of the Paramount deal that they have stressed is better. And I think some of the Warner Brothers shareholders seem to agree or at least entertain it is, you know, they're offering to buy the whole company. They will just take it out $30 a share. Warner Brothers doesn't have to proceed with a spin beforehand. What is your argument for why your more complex deal is better for all those shareholders than just getting the cash tomorrow?
This deal is not complicated at all. It is $27.75 plus the value of Discovery Global. By the way, it's the deal that they want. It is the deal that they asked for. These are the assets that were for sale. So, the more complex thing is buying the whole company. If you do that, then you're buying these European sports networks. As you know, sports rights in Europe are incredibly highly regulated, as is the television landscape, which they'd be stepping themselves into. So, I would argue that our deal is quite simple. $27.75 per share plus the value of Discovery Global. And which I think is an incredible asset and they do, and they do too. That's why they set the offer up this way. That's why when we were bidding, we bid for the assets that were for sale.
If Discovery Global is a great asset, I'm just wondering, have you guys talked about just buying the whole company and doing the spin yourself?
