The head of Netflix has indicated that Paramount's acquisition of Warner Bros is expected to lead to "cuts exceeding $16 billion" in roughly "18 months or so"

In a discussion with Bloomberg, Netflix CEO Ted Sarandon expressed that Paramount's recent acquisition of Warner Bros, which surpasses Netflix's initial offer, requires significant cost reductions after the transaction is finalized. He revealed, “We were in the books of Warner Bros., and the biggest cost centers are people in productions.” He mentioned anticipated cuts exceeding $16 billion, asserting that lenders were informed this would occur within 18 months.

Such financial scrutiny implies that Warner Bros.' operations in areas like gaming, film, and television will face budget evaluations. Warner Bros. is known for its prominent game studios such as Rocksteady, TT Games, Avalanche Software, and other mobile game developers.

Netflix chose not to counter Paramount's decisive move to acquire Warner Bros for $31 per share in an all-cash bid, stepping back from its prior offer of $27.75 per share in cash and $4.50 in Netflix stock solely focused on Warner's film, streaming, and gaming sectors. Netflix's stock value initially fell after their bid but rebounded upon announcing their withdrawal, which also resulted in a $2.8 billion termination fee from Paramount.

Our previous analysis suggested that Paramount's acquisition would better serve the gaming studios, a conclusion supported by Netflix's own decision to exit the console gaming space. Netflix described Warner's game sector as a minor part of their potential deal.

Concerns about Paramount's strategy post-acquisition prevail across Warner Bros., as Sarandon calls for rigorous examination of the deal, paralleling his testimony before the Senate about this transaction's competitive elements. Notably, Paramount CEO David Ellison's father, linked to Donald Trump, has personal wealth backing this endeavor, which enjoys White House support but will face regulatory reviews in regions like California and the European Union.

Before Paramount's bid, Warner Bros expressed intentions to concentrate on revitalizing four primary franchises: Harry Potter, Game of Thrones, Mortal Kombat, and DC Comics, following lagging performance in its gaming branch. CEO David Zaslav highlighted disappointment in the underperformance attributed to Multiversus, a game later terminated along with the closure of Player First Games, Monolith Productions, and Warner Bros. San Diego.

For a complete review of the acquisition's developments, you can find a detailed timeline here.