This Was A Netflix Essay Until Paramount Walked In

Re-scoring my five implications with a new buyer and new headaches

You guysssss. It has been quite the week. Great to see lots of you at MIP London and hoping to see more of you on Monday when I’m at sky & NOW doing a little chit chat. Say hi if you’re on the campus.

So. A few weeks ago in a Senate hearing, Netflix accidentally let slip a subscriber number they don’t report on anymore. Ted Sarandos was asked how many US subscribers Netflix has. He said “around 86 million”, then immediately tried to widen the frame to “North America”, because Canada is apparently a legal strategy.

I then spent the next three weeks writing a genuinely brilliant, extremely smug update on the Netflix–Warner deal based on that slip.

Then Thursday happened. Paramount Skydance slapped down a $111bn bid for Warner Bros. Discovery. WBD’s board called it “superior”. Netflix looked at $31 a share and said it was “no longer financially attractive”.

So yes, my draft just got made obsolete in real time.

Fine. The deal was never the point. The mechanics were. So this is the Friday version: short, fast, mildly vindictive.

As you may recall, months ago I wrote

Turns out I accidentally wrote the template for whoever bought Warner. Netflix walking away doesn’t make those implications irrelevant. It just swaps the main character. So here’s the deal: same assets, different buyer, different headaches.

I’m going to rerun my five implications with Paramount in the Netflix slot and answer three simple questions for each one:

• Does it still happen?

• Does Paramount solve it, worsen it, or just inherit it?

• What new problem appears because it’s Paramount, not Netflix?

My Five Implications, Now Starring Paramount

1. The “Bad Bank” strategy

In my Netflix version, the clever bit was basically: buy Warner, but don’t buy the part of the business in managed decline.

Netflix wanted the shiny stuff (studio + streaming) and planned to park the shrinking US cable channels (CNN, TNT, TBS, Discovery Channel) in a separate company called “Discovery Global”. Think: a storage unit for legacy TV, plus the debt. It even kept TNT Sports UK & Ireland because live sport is one of the few linear formats people still reliably show up for, on purpose.

Update: Paramount just bought the whole house, and the parts that come with a “managed decline” label.

• This bid is for the entire WBD business, cable networks included.

• So there’s no neat pre-built “storage unit” baked into the deal. If the Ellisons want the bad-bank move, they’ll have to do it after they own everything, in full daylight, while regulators watch and the press runs live commentary like it’s sport.

Bottom line: the bad-bank idea still holds. It just went from “built into the plan” to “something Paramount may end up doing later, the hard way.”

2. The “Sora” fortress (the library as ground truth)

In my Netflix version, the point was simple and slightly bleak: Silicon Valley doesn’t see Warner as a studio. It sees Warner as a hard drive.

• AI video models (think Sora) have one problem that ruins the party: “where did you get the footage?”

• Training on the open web (scraping YouTube, pirated film rips, whatever) is the fastest route to lawyers turning your product roadmap into a courtroom calendar.

• Owning Warner’s clean master files is a very expensive way of buying something priceless in 2026: receipts. (And, as I noted in the original piece, it’s still not frictionless: performers’ unions and regulation will absolutely have opinions.)

Update: same vault, different landlord.

• If Paramount closes, it wrests control of WBD assets including HBO and franchises like Harry Potter and Batman.

• So the library-as-training-set thesis doesn’t disappear. It just moves. The archive stays the archive. The leverage just shifts from Netflix’s hands to the Ellisons’.

The extra wrinkle: Netflix could plausibly try the “we’re not TV, we’re an attention company” routine in court. Paramount… has a harder time delivering that line without everyone laughing.

Bottom line: my “library as ground truth” point still holds. It’s just been reassigned to a different owner.

3. The “monopsony” singularity (the end of the overall deal)

In my Netflix piece, I argued the real danger wasn’t monopoly (one seller). It was monopsony: one dominant buyer setting the terms. (Roy Price has made this point for years, and he’s right.)

Why that matters:

• When there are fewer cheque-writers, the cheque-writers get pickier.

• “Overall deals” start to look like a luxury from a more naïve era.

• Mini-rooms and shorter gigs harden into the default.

• The apprenticeship ladder (staff writer > showrunner) gets sawn in half.

Update: the apocalypse got rescheduled, not cancelled.

• Netflix walking away matters because it avoids the cleanest “single sun” outcome: one algorithmic volume machine absorbing the prestige counterweight.

• But consolidation is still consolidation. A combined Paramount–WBD is still another step towards fewer, larger buyers, which is the same pressure, just delivered as a slow squeeze instead of a meteor.

Bottom line: creators dodged the most extreme version of my scenario. But to be clear, they didn’t dodge the direction of travel.

4. The “brand-safety gatekeeper” (the bifurcated internet)

In my Netflix version, advertising was an unspoken motive. Netflix had the premium shows, but not enough volume of ad inventory to satisfy the biggest global advertisers consistently. HBO plus Netflix would have created a single obvious place to buy “premium, controlled, brand-safe” video at scale.

I framed it as a split:

• Open reach (massive scale, less control over adjacency)

• Premium storytelling (tight controls, brand-safety guarantees, frequency capping)

Netflix + HBO would have been the toll booth for the premium lane, and mid-sized streamers (including Paramount+) would get starved of the high-value ad budgets they need.

Update: Paramount just tried to buy its way out of being the one that gets starved.

• In the Netflix timeline, Paramount+ was a casualty.

• In this timeline, Paramount’s basically saying: fine, we’ll become the premium inventory pile instead of begging to rent it.

This doesn’t “fix” the bifurcation. If anything, it formalises it: premium inventory gets concentrated into fewer hands, whilst open platforms keep hoovering up infinite attention at the top of the funnel.

Bottom line: the split remains. The question is simply who gets to stand at the premium door with the clipboard.

5. The “everything store” defence (redefine the market)

In my original piece, the legal move was the tell: If regulators say, “You’re buying too much television,” you don’t argue about shows, you argue about definitions.

Netflix’s likely defence was: we’re not a dominant TV network, we’re a small player in the much bigger attention economy. That’s why I called out Warner Bros. Games (Hogwarts Legacy) as a useful prop in court: it helps Netflix point at Fortnite, TikTok, and anything else that steals time. And it pairs neatly with Reed Hastings’ famous line that Netflix competes with “sleep” and “taking a walk”.

Update: Netflix didn’t lose the argument, it just stopped needing to make it.

• Netflix’s posture now is brutally clean: this was a “nice to have” at the right price, not a “must have” at any price.

• Paramount, meanwhile, has been arguing it has a clearer path to regulatory approval than Netflix did, which tells you the strategy: stay inside the old boxes (studios, cable networks, news) and sell the deal as more legible.

Bottom line: Netflix avoids the courtroom definition fight. Paramount inherits it, just in a more traditional costume.

New 6th Implication: the political surface-area premium

This wasn’t in my December essay because, you know, Trump: politics is now a deal term.

• Paramount ran an aggressive pressure campaign, appealed to the Trump administration, and threatened a proxy fight.

• The talks were openly affected by politics: Trump weighed in repeatedly, bought corporate bonds, and publicly told Netflix to sack Susan Rice from its board or “pay the consequences”.

• David Ellison even attended the State of the Union as a guest of Lindsey Graham.

At this scale, media becomes a political surface, and every additional square inch of surface area attracts attention you didn’t ask for.

Bottom line: Paramount leaned into the political layer and Netflix deliberately stepped away from it.

So did Paramount solve anything?

It solved exactly one thing: it outbid Netflix with cleaner, more de-risked terms. It did not erase the structural diagnosis from my original post:

• parts of the legacy bundle are still in managed decline

• libraries are becoming “ground truth” assets in an AI world

• labour leverage still compresses as buyers consolidate

• and the real competitive battle keeps drifting upstream to distribution and default behaviour, not just catalogue

My three-week draft is dead. The underlying machine is very much alive.