Only firms that have scale in content and a technology engine that drives its discovery and monetisation can compete,’ explains Vanita Kohli Khandekar.
Ever since it got into streaming in 2007, Netflix has broken every rule in the media industry playbook.
It has dropped entire seasons of original shows in one go, kept advertising out of its originals like Squid Game, Stranger Things or Bridgerton yet priced itself at less than a third of cable TV in the United States.
With 302 million subscribers and $39 billion in revenues in 2024, it is the largest standalone streaming player in the world. There are, however, limits to pay-driven growth.
Now, as it seeks to scale up, Netflix is becoming more like the legacy media players it took on. It introduced ad-supported programming and has got into sports.
Its co-Chief Executive Officer, President and Director Ted Sarandos even has a leading role in the merger drama unfolding in Hollywood currently.
Paramount Skydance, the $29 billion (2024 revenues) studio behind Titanic, Forrest Gump, and the Mission Impossible films, among others, had made three unsuccessful bids for rival Warner Brothers Discovery (WBD) by October 2025.
The last one was at $58 billion. Soon Netflix got into the game. On Friday, December 5, it announced a deal to acquire WBD at a price of $83 billion.
Just two days later, on December 8, Paramount launched a hostile takeover bid with an offer of $108 billion.
WBD, which made a revenue of over $39 billion in 2024, is a good firm to have.
It owns TV studios that have churned out huge hits like The Big Bang Theory, film studios that created Harry Potter, The Lord of the Rings and, more recently, Barbie.
Its biggest attraction for Netflix perhaps is HBO Max, the service behind Game of Thrones, The White Lotus and other iconic shows.
There might be some overlap but HBO Max’s 128 million subscribers are coveted by everyone. Then there are Warner’s linear networks like TNT and Discovery.
These were part of the deal with Paramount but not with Netflix. Warner’s estimated earnings before interest, taxes, depreciation and amortisation, or Ebitda, from streaming and films for 2026 is $3.3 billion.
Netflix is paying 25 times that, says a note from Media Partners Asia.
Paramount has come back with an offer that is 32 times that. Compare that to the much larger Disney, which is trading at 11 times its Ebitda of $19 billion.
Almost every analyst and commentator is questioning not the logic but the price at which this deal is being discussed.
Over the last two decades, most media mergers have disappointed — they have ended up destroying brands and wealth because cultures simply don’t match even if the ‘synergies’ look good on paper.
If it wins, Netflix has lined up $59 billion in debt, says Media Partners Asia. And if Paramount does, it will raise huge amounts too.
Both these firms are capable of building more programming IP or intellectual property and a bigger business in less than half the money they plan on spending.
Sure, acquisition could speed things up but at what price? What is this really about?
It is a battle for survival.
After legacy profit engines like TV decline, artificial intelligence (AI) enters the content stream to crash costs and revenues, tech-media has gobbled up all there is — the guys who will remain, bloodied but standing are the ones with scale.
Funnily enough, this game began with Netflix and streaming. It is now playing out in its full glory.
Think about it.
The Internet and streaming have democratised entertainment, helped niches and long tails.
But it has also consolidated distribution and audiences to a point where it is impossible to succeed if your show/story doesn’t work across audience clusters globally.
The companies that own the largest distribution platforms — Google with YouTube, Meta with Instagram, Facebook and WhatsApp, Amazon with Prime Video/Music, Apple — are the ones that will rule the media game.
The battle is for audiences and their time; it doesn’t matter what country, language or format they are on.
And only firms that have that scale in content and a technology engine that drives its discovery and monetisation can compete.
Watch Slow Horses, Ted Lasso, Shrinking, Tehran, Severance, Down Cemetery Road, Bad Sisters on Apple TV. These are some of the best shows I watched this year.
Each of them is superbly written, cast and produced, setting a bar that most streaming services will find hard to match.
Apple TV makes a loss of reportedly a billion dollars a year. For a $416 billion corporation that is a rounding-off error, say analysts.
That is one end of the business.
At the other end is YouTube, TikTok and others with millions of hours of video and shorts.
At over 2.85 billion users, YouTube is the new TV, and it combines a bit of everything that legacy media offers.
To compete in this landscape, scale is crucial, which is what Netflix and Paramount are seeking to build, albeit at too high a cost.
If Netflix and Warner combine, it creates a player with an estimated $70 billion in revenue. If Paramount and Warner do, that figure is $79 billion.
Either combination would be globally ahead of YouTube ($61 billion) and The Walt Disney Company, which excluding parks and experiences, is at $58 billion, according to the Media Partners Asia note. (These figures take into account proforma 2025 revenues for relevant streaming and studio businesses only).
Now imagine what could happen if Apple, Amazon or Meta with their gargantuan size got into the game.
There is enough material here to start writing a new version of HBO’s Succession.
Photographs curated by Satish Bodas/Rediff
