How Ted Sarandos became the ultimate Hollywood gate-crasher

Hollywood moguls as soon as dismissed the outsize ambitions of Netflix’s executives.

“Is the Albanian military going to take over the world?” former Time Warner Chairman Jeff Bewkes asked a reporter 15 years ago. “I don’t suppose so.”

Assume once more. On Friday, Netflix co-Chief Government Ted Sarandos pulled off an audacious $82-billion deal to purchase a lot of Bewkes’ outdated haunts: the Warner Bros. movie and TV studios in Burbank, and HBO and the HBO Max streaming service in Culver Metropolis.

“It is a uncommon alternative,” Sarandos stated in an investor name. “It’s going to assist us obtain our mission to entertain the world and to convey individuals collectively via nice tales. We’ve constructed an incredible enterprise, and to do this, we’ve needed to be daring and proceed to evolve.”

If the takeover is accredited — it may face a raft of authorized and regulatory challenges — Netflix would achieve possession of such classics as “Casablanca” and “Goonies” and widespread characters together with Batman, Scooby-Doo, Soiled Harry and Harry Potter.

The acquisition represents a second of triumph for the brash Sarandos, who has gone from Hollywood gate-crasher to the last word energy dealer.

“There appears to be no ceiling of alternative for Ted Sarandos,” stated Tom Nunan, a former studio and community govt. “He’s the king of Hollywood.”

Netflix’s victory within the public sale for Warner Bros. surprised many in Hollywood who figured Paramount — whose bid was backed by the one of many world’s wealthiest males, Larry Ellison — had a lock on the prized Warner belongings.

Even Netflix’s brass downplayed their merger ambitions as just lately as two months in the past. Co-Chief Government Greg Peters shrugged off any curiosity at a Bloomberg convention, saying: “We come from a deep heritage of builders slightly than patrons.”

However the streaming large’s dominant market place and robust steadiness sheet allowed it to assemble a largely money bid that wowed Warner Bros. Discovery’s board, which voted unanimously in favor. What’s extra, Netflix agreed to soak up greater than $10 billion of Warner Bros.’ debt, bringing the deal’s complete worth to $82.7 billion.

Warner shareholders and U.S. and overseas regulators nonetheless should approve Netflix’s takeover. Netflix — which relies in Los Gatos however has a big presence in Hollywood — stated it expects the deal will shut inside a 12 months to 18 months.

Netflix, nevertheless, already is dealing with stiff opposition from cinema chains, lawmakers, outstanding creatives and labor unions. The Writers Guild of America stated the deal needs to be blocked.

“The world’s largest streaming firm swallowing one in all its largest opponents is what antitrust legal guidelines have been designed to stop,” the WGA stated.

A profession of defying conference

If it succeeds, the takeover can be a triumph for Sarandos, the corporate’s typically controversial co-CEO who has been liable for Netflix’s content material operations since 2000. Till just lately, he was seen as a disruptor who upended the trade’s long-standing enterprise fashions, particularly its reliance on the large display.

It’s a outstanding trajectory for the 61-year-old Phoenix native and film buff, who as soon as clerked in a strip mall video retailer, becoming a member of Netflix when it was a scrappy Silicon Valley startup distributing DVDs via the mail in crimson envelopes.

Firm co-founder Reed Hastings was impressed by Sarandos after he struck a first-of-its-kind revenue-sharing take care of Warner Bros. as an govt at West Coast Video/Video Metropolis retail chain.

Sarandos has been in control of Netflix’s content material operations ever since.

One among 5 kids, he’s the son of an electrician and a stay-at-home mother who left the TV on all day.

Whereas working on the video store, Sarandos earned a popularity for giving nice film suggestions to clients based mostly on what they appreciated to observe. In some ways, he was a human model of Netflix’s now well-known advice algorithm.

Sarandos spent his first three years at Netflix working out of his bedroom in Los Angeles. Hastings and Sarandos’ enterprise was largely liable for bankrupting the then-dominant video rental chain, Blockbuster.

His knack for realizing what audiences need was instrumental in Sarandos’ ascent at Netflix and Hollywood: Netflix now has greater than 301 million subscribers, and it may develop much more.

Analysts estimate the acquisition may add a further 100 million customers to the streaming service — a bounty that’s anticipated to attract the eye of antitrust regulators.

Over time, the corporate shifted to streaming licensed TV and movies, however as studios began to tug away from these offers, Netflix started its foray into unique content material.

Once more, Netflix wasn’t taken too critically at first. Sarandos would get TV present scripts with indicators of rejection — espresso stains and smudged fingerprints — however his gamble on shopping for the rights to David Fincher’s political thriller, “Home of Playing cards,” starring Kevin Spacey and Robin Wright, in 2011 modified that.

Sarandos walked into Fincher’s workplace and provided him a provocative deal: Netflix would decide to the primary two seasons of “Home of Playing cards” with out seeing a pilot for $100 million.

“There have been 100 causes not to do that with Netflix,” Sarandos told The Times in 2013. “We needed to give them one nice cause to do it with Netflix.”

Sarandos has made a profession out of defying conference.

Underneath his management, Netflix launched episodes to exhibits , permitting individuals to binge watch a complete season. The platform greenlighted full seasons of exhibits even earlier than they started, and older sequence like “Buddies” and “The Workplace” discovered new audiences years after they ended on community tv.

He made bets on sequence that different conventional studios handed on, together with the favored sci-fi present “Stranger Issues,” which might turn out to be a world hit with its personal universe of characters, like “Star Wars.”

Some studios have been hesitant to offer the present’s creators, Matt and Ross Duffer, first-time showrunners, the reins. Usually, Netflix and Sarandos thought in another way.

“They learn it, they acquired the venture, they usually wished me and Ross to be concerned as showrunners and to direct, and that utterly modified our lives,” stated Matt Duffer on stage on the L.A. premiere of the final season of “Stranger Things” in Hollywood this month.

“Ted made that call all the way in which again then, 2015, and that’s why we’re right here immediately,” he stated.

Over time, Netflix grew to become a spot the place expertise wished to pitch their exhibits.

“The purpose is to turn out to be HBO quicker than HBO can turn out to be us,” Sarandos advised GQ in 2013.

Quickly, Sarandos could be in control of HBO.

Netflix expanded its attain globally, making a manufacturing pipeline overseas. Its largest worldwide hits embrace 2021 Korean language sequence “Squid Sport,” Netflix’s hottest present of all time, with its first season producing 265.2 million views in its first three months.

However as Netflix’s technique modified the Hollywood panorama, it additionally angered theater house owners and opponents who have been upset that the streamer was taking part in by completely different guidelines that challenged long-standing practices within the leisure trade.

Sarandos specifically has taken direct intention on the conventional follow of releasing films in theaters first — and protecting them there for months earlier than making them accessible for house viewing.

Netflix usually releases films in theaters just for brief intervals with the intention to attraction to followers or qualify for awards. They seem on its platform shortly after they debut in theaters.

Sarandos was promoted from chief content material officer to co-CEO in 2020, operating the corporate with Hastings, who had beforehand served as Netflix’s CEO.

The duo confronted their largest problem in 2022, when Netflix’s subscriber numbers plunged by 200,000 subscribers in its first quarter, the primary decline in additional than a decade.

Analysts feared that the streaming revolution was over and Netflix had reached a ceiling to its progress.

However Netflix was capable of finding new income streams by cracking down on password sharing and getting into new areas of enterprise it beforehand ignored, together with promoting and dwell occasions like sports activities, together with NFL soccer.

In 2023, Hastings stepped down from his function to be govt chairman, and Peters, chief working officer, was named to the co-CEO function.

Immediately, Netflix is broadly heralded because the winner of the streaming wars years after many rivals tried to enter into the house, placing the corporate in a great place to make a big money and inventory bid for the Warner Bros. Discovery belongings it was searching for.

In contrast to lots of its opponents, Netflix is worthwhile — the corporate generated $2.5 billion in web earnings within the third quarter, up 8% from a 12 months earlier.

Netflix has provided Warner Bros. Discovery shareholders $23.25 in money and $4.50 of Netflix inventory for every share. In September, earlier than Paramount began the bidding, Warner Bros. was buying and selling round $12.

“These belongings are extra worthwhile in our enterprise mannequin, and our enterprise mannequin is extra worthwhile with these belongings,” Sarandos stated in a name with buyers on Friday.

If the deal is accredited, Netflix can be the third proprietor of Warner Bros. and HBO in a decade. On the decision, Peters addressed his earlier critique that almost all massive media mergers fail.

“We perceive these belongings that we’re shopping for,” Peters advised buyers on Friday. “Issues which can be essential in Warner Bros. are key companies that we function in, and we perceive lots of instances, the buying firm, it was a legacy, non-growth enterprise that was in search of a lifeline. That doesn’t apply to us. We’ve acquired a wholesome, rising enterprise.”

Sarandos expressed confidence the deal would undergo.

“This deal is pro-consumer, pro-innovation, pro-worker, pro-creator, pro-growth,” Sarandos advised buyers. “Our plans listed here are to work actually intently with all the suitable governments and regulators, however actually assured that we’re going to get all the mandatory approvals that we want.”

Sarandos is one in all Hollywood’s most well-compensated CEOs, with a package deal that was valued at $61.9 million in 2024.

Lengthy seen as pleasant to expertise, he has weathered some controversies over time.

Throughout twin strikes in 2023, writers and actors complained bitterly about how Netflix was compensating them for his or her work on streaming exhibits.

Sarandos was seen as one of many key Hollywood players in serving to bridge the hole. One of many outcomes of the strikes was studios together with Netflix would launch viewership knowledge to the unions and provides bonuses to expertise based mostly on sure viewership metrics.

In 2021, Sarandos confronted inside backlash inside Netflix when some staff organized a walkout over transphobic feedback stated on comic Dave Chappelle’s particular “The Nearer.” Sarandos had stood by the comic, saying in a workers memo that “content material on display doesn’t instantly translate to real-world hurt.” However days later he advised Selection that “I screwed up that inside communication.”

“I ought to have led with much more humanity,” Sarandos stated.

Regardless of its dominance in streaming, Netflix continues to face challenges from different types of leisure, together with YouTube and social media websites like TikTok or gaming communities like Fortnite that every one compete for eyeballs.

“In a world the place individuals have extra decisions than ever easy methods to spend their time, we are able to’t stand nonetheless,” Sarandos stated Friday. “We have to maintain innovating and investing in tales that matter most to audiences, and that’s what this deal is all about.”