Netflix was long ‘a builder not a buyer.’ Is that era over?
The Netflix logo is pictured at the company’s offices on Vine in Los Angeles on December 5, 2025.
Patrick T. Fallon | AFP | Getty Images
For years netflix senior executives would tell investors they were builders, not buyers. Now this sentiment towards growth may be changing.
Netflix on Thursday reported quarterly earnings. Netflix’s earnings calls typically focus on metrics like engagement, content spend, price increases and membership. While those factors were still present during Thursday’s call, analysts were also questioning Netflix’s M&A aspirations. Warner Bros. Discovery sales process.
The emergence of Netflix as the bidder for WBD late last year surprised many in the industry and the market. Even more striking was the announcement in December that Netflix had agreed to acquire WBD’s film studio and streaming assets in a $72 billion deal.
While the transaction initially attracted attention, it has now opened the door to questions from media watchers and insiders about whether the company should make other deals as broadcasting becomes more competitive.
Netflix co-CEO Ted Sarandos said Thursday that questions have arisen both internally and externally about the company’s ability to make such a big deal.
“But what we learned was that our teams were more than up to the task,” Sarandos said. “We learned a lot about the implementation of the agreement and early integration.”
Netflix has said its rationale for moving toward a major acquisition is simple. While it is by far the largest streaming service when it comes to subscribers (it reported 325 million paid members worldwide in January), it was looking to deepen its bank of franchises and intellectual properties and get more directly into the movie studio business.
Paramount Skydance he eventually nixed the deal with a higher offer in February, and Netflix pulled out (he quickly collected his $2.8 billion breakup fee).
“But for the most part, we’ve really improved our M&A,” Sarandos said. “And the most important benefit of all this work was that we tested our investment discipline.”
‘Merger and purchasing power’
Netflix CEO Ted Sarandos arrives at the White House in Washington on February 26, 2026.
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Sarandos’ newfound openness to mergers and acquisitions has led some to wonder whether the streaming giant might be looking for new targets.
After all, its intellectual property library and relationship with the movie studio business is still where it was before WBD made the deal.
Although Wall Street is clearly not a fan of Netflix’s proposed acquisition of WBD (shares are down 15% since the deal was announced and are up about 26% since then), the media landscape will undeniably be different if Paramount’s takeover is approved.
Paramount is seeking to acquire WBD’s entire cable TV networks, movie studio, broadcast and entire businesses. This would create a massive rival for Netflix and its media peers on several fronts.
Mike Proulx, vice president and research director at Forrester, said before Netflix’s earnings were released: “The way the WBD cards fall is very important. A potential combination of Paramount+ and HBO Max is changing the streaming landscape in ways Netflix hasn’t had to deal with before.”
“I want to remind you that we have been saying all along that the World Bank agreement is not a must-have, but a nice-to-do thing,” Sarandos said on Thursday. “We are very confident in the core business.” he said. He added that Netflix sees its biggest risk going into the deal process as losing focus on its core business.
“As you can see from our first quarter results, we have not lost focus,” he said.
Still, Netflix’s earnings report, and especially its forward guidance, appeared to disappoint investors.
The company’s shares fell nearly 10% in extended trading after the streamer maintained its full-year target despite revenue growth in the first quarter and the termination of the WBD deal.
Netflix shares fell after its first-quarter earnings report.
“The biggest surprise this quarter was margin guidance, which remained unchanged for the full year despite the abandonment of the Warner Bros. deal and related M&A costs,” analyst Robert Fishman of MoffettNathanson said in a research note Friday.
Netflix didn’t spend a lot of time on mergers and acquisitions during its earnings call, instead focusing on more familiar talking points like user engagement. a growing advertising business and spending on content that engages members (and helps justify price increases).
A return to Netflix’s typical narrative seemed to be a welcome one.
“After WBD, the company can return to its relentless focus on growing revenue and profits by leveraging its global subscriber scale,” Fishman said in a note Friday. He added that Netflix management “highlighted the success of recent price increases and noted that retention was strong” and was also on track to double advertising revenue this year.
Still, Forrester’s Proulx said in a note after the earnings call that questions remain even though Netflix is ”fully focused on executing its tried-and-true playbook.”
“None of this changes the fact that the broadcast market is more competitive than it was a year ago,” Proulx said. “Pricing power needs to be gained every quarter, and maintaining engagement as prices rise remains the key challenge in the streaming market. Netflix is betting that consistent execution in its core business will win in a more crowded and strengthening market.”
