Netflix Just Bought Hollywood

It’s official: Netflix has agreed to acquire Warner Bros. Discovery (WBD) in a deal valued at $72 billion plus debt. WBD shareholders will receive $23.25 in cash and $4.50 in Netflix stock for each share. The deal comes after WBD rejected three bids from Paramount. 

Netflix’s roughly $28 per share offer is substantially higher than Paramount’s first offer of $19 per share and represents a more than 50% premium to WBD’s stock price before it announced it was pursuing a sale. Paramount’s final offer late last week was $30 per share for the entire company.

The merger means that Netflix now controls some of the most valuable intellectual property in entertainment: DC Comics, Harry Potter, The Lord of the Rings, Game of Thrones, The Sopranos, plus Warner Bros.’ movie production expertise. The linear networks business (including CNN, TNT, HGTV, and Discovery+) will still be spun out before the deal closes, likely in Q3 2026.

Netflix says it will maintain Warner Bros.’ current operations, including theatrical releases for films.

We were wrong about this. We thought the Ellisons would just walk away with Warner, but Netflix has stepped up. I guess they looked at their $400 billion market cap and said, OK, we’re gonna pay $72 billion plus debt for assets that are singular.

It's just crazy how human nature plays such a big role in everything. This stock was at $10 not long ago, and nobody wanted it. Then, once Paramount wanted it, all of a sudden the company is worth 180% more than it was just a few months ago. 

But let’s back up. Trump and Mamdani won because they’re focused on affordability. Americans think that, if someone just puts money in my pocket or screams socialism, they’re going to make things more affordable. That doesn’t work. As a matter of fact, it makes things less affordable. Affordability is a function of structural long-term policies that result in one word, competition.

We need structural, regulatory, systemic policies that create competition. And this deal would give Netflix control of an enormous share of premium TV and streaming, as well as some of the most valuable franchises in entertainment. 

It would lead to fewer choices, higher prices, and worse terms for consumers, and lower salaries for creatives because there will be fewer bidders for their talent.

The real losers here are WBD employees and AMC and Cinemark shareholders.

Netflix’s revenue per employee is more than twice as high as WBD’s after excluding the linear business. If Netflix forces WBD to match its operational efficiency, more than half of streaming and studio employees could lose their jobs. 

AMC and Cinemark, the first- and third-biggest movie theater owners in the U.S., fell 3% and 8%, respectively, on Friday after the deal was announced. Why? Movie theaters need a certain number of new releases to be profitable, and, historically, mergers decrease the number of theatrical releases. 

Netflix promises to keep premiering WBD in theaters, but taking Netflix’s word flies in the face of historical data. 

This acquisition will make the declining movie theater business even worse.

Anthropic is gearing up for an IPO valued at an estimated $300 billion in early 2026, and OpenAI appears to be on a similar timeline. Their race to the public markets comes at a moment when the AI narrative itself has evolved dramatically.

Chapter 1: Optimism

In January, AI enthusiasm helped push the S&P 500 toward record highs. Even the DeepSeek shock — which briefly knocked the index down 1% — faded quickly, and the S&P finished the first six months up 5%.

Chapter 2: Euphoria
AI investment alone added a full percentage point to GDP growth in the first half of the year, and stocks jumped double digits on AI-related deal announcements. 

Chapter 3: Cautiously Pessimistic 

The tone shifted dramatically in November. In the first week of November, $820 billion of AI-related market value was wiped out.

An important indicator was the market’s reaction to capex spending announcements. Over the summer, capex increases were interpreted as bullish demand signals. Microsoft’s record forecast pushed the stock up 7%, and Meta’s sent shares up 11%.

Now, capex is being interpreted as a warning sign. Microsoft reported higher capex in the last quarter and shares fell 3%, and Meta raised theirs even more aggressively — shares dropped more than 10%. The same signal has flipped from bullish to bearish.

Anthropic’s positioning as the “responsible” AI company looks prescient. The company is on track to break even by 2028, while OpenAI expects $74 billion in operating losses in the same year and anticipates burning 14x more cash than Anthropic through 2030.

Anthropic announcing an IPO before OpenAI was brilliant. There’s generally a notion that the company that goes public first is further ahead than the others, which may or may not be true, but regardless, the news has brought a lot of attention to the company.

Dario Amodei, the CEO of Anthropic, is managing his brand really well. He comes across a bit more as a grown-up and a bit more civic-minded than Sam Altman.

This isn’t investment advice, but I will probably try and get in on the IPO, because it’ll be one of the only AI pure plays, and the retail market is just going to go crazy. They’ll also price the IPO below what they think it’s going to go out at, because it’ll be a branding event and they’ll want the stock to pop.

____________sponsored content ____________

Say goodbye to dense, static documents. And say hello to captivating how-to videos for your team using Guidde.

1️⃣ Create in Minutes: Simplify complex tasks into step-by-step guides using AI.
2️⃣ Real-Time Updates: Keep training content fresh and accurate with instant revisions.
3️⃣ Global Accessibility: Share guides in any language effortlessly.

Make training more impactful and inclusive today.

The best part? The browser extension is 100% free.

Check out Guidde

____________sponsored content ____________

Michael and Susan Dell made a major announcement last week: They’re giving 25 million American children $250 each to jump-start investment accounts for their futures. The gift will go to the Treasury Department and fund accounts for children 10 and under, targeting ZIP codes with median household incomes below $150,000.

This builds on the Trump administration’s “Invest America” initiative, which will seed $1,000 for each American baby born between 2025 and 2028. Parents can contribute up to $5,000 annually. 

The accounts will be invested in U.S. equities and locked until the child turns 18, when they will be automatically converted to traditional IRAs. Account holders can make early withdrawals for education or job training, buying a home, or starting a business. 

The goal of the initiative is to give more young people, especially from low-income and middle-income families, access to the power of compounding in the stock market. 

Australia’s “superannuation system” requires employers to contribute 12% of wages to retirement accounts, building $3 trillion in assets (150% of GDP). President Trump said the White House is “seriously considering” the Australian model for a U.S. program.

So the Invest America initiative will help young people once they hit 18. But what is the U.S. government doing for kids before then?

We need to figure out a way to invest in children earlier than 18, full stop. As economist Kathryn Anne Edwards told us, we spend more on deportation than we spend on childcare and school lunch. Specifically, the government spends $9,000 annually on each child, and it costs $17,000 to deport a single person.

Look, we keep throwing money at education, and it doesn’t f*cking work. This means it needs radical reform. One problem is administrative bloat. Since 2000, there has been 95% growth in administrative staff at public schools but only a 5% increase in students.

Here’s what else we need to do:

End property tax funding for schools. Making schools depend on property taxes means schools in low-income neighborhoods have less money. We’re creating an out-of-control caste system when we spend $150,000 on a poor kid’s education and a million dollars on my kid’s education. Kids from rich households are 77x more likely to get into an elite university. Upper-income kids score 250 points higher than middle-income kids. We’re perpetuating a cycle of income inequality.

Expand university seats. If you’re not growing your freshman class faster than population growth, you should lose your tax-free status because you’re no longer a public servant, you’re a hedge fund with classes.

Expand vocational programming. Every public university has to have 20% of its certificates be one- and two-year vocational programs: nursing, specialty construction, cybersecurity.

Child tax credits and a $25 minimum wage. Our budget reflects our values. When we’re spending more money deporting undocumented workers than on kids, we’ve decided that our priority is deportation, not children.

Age-gate social media. Jonathan Haidt asked ChatGPT how it would ruin the next generation. ChatGPT basically said: smartphones and social media. We shouldn’t allow synthetic relationships for kids under 18. No amount of money can replace basic life skills if your kid believes he or she can have a reasonable facsimile of life on a computer with an algorithm.

The countries reporting the highest levels of loneliness also have GDP per capita roughly 3x greater than those reporting the lowest levels. That raises an uncomfortable question: Does greater loneliness accompany greater wealth?

Research doesn’t offer a simple answer. Emily Bianchi of Emory University and Kathleen Vohs of the University of Minnesota found that higher earners spend more time alone and less time socializing — and when they do socialize, they spend proportionally less time with family and more with friends.

However, the German Institute for Economic Research found that higher-income individuals consistently reported lower levels of loneliness.

The conflicting results make more sense when one considers what loneliness actually measures: Loneliness is the gap between the social connections one has and the connections one wants. 

Money may not add more social time, but it can give people the freedom to choose their own community, rather than relying on whatever family ties they happen to be born into. In that sense, money may not buy happiness, but it might buy the agency to seek it. 

AI could make things worse for both high- and low-income countries. More than half the world now has a smartphone, meaning billions can turn to personalized, digital companionship that demands none of the vulnerability, rejection, or uncertainty that real human connection requires.

The Netflix-WBD deal will be blocked. Trump and his cronies don’t want the deal to go through, and the DOJ and the FTC will see this as a bad move for consumers.

In the latest episode of Office Hours, Scott discusses how he comes up with ideas and develops his writing voice, and where he gets his news in a world run by algorithms.