Netflix reaffirms its independent path amid M&A speculation and industry shifts

• Netflix is leveraging generative AI to streamline visual effects, although human creativity remains at the core.
•  “We’re not worried about AI replacing creativity, but we’re very excited about AI creating tools to help creativity,” Co-CEO says

Netflix co-CEO Ted Sarandos drew a definite line under merger rumours following Warner Bros. Discovery’s announcement that it’s weighing a breakup or even a full sale of its business.

The speculation about consolidations in Hollywood surged as WBD launched a review of “strategic alternatives,” drawing attention to potential buyers like Paramount Skydance, Comcast, and Netflix itself.

But Sarandos was crystal clear on Netflix’s third-quarter earnings call: “We’ve been very clear in the past that we have no interest in owning legacy media networks. There’s no change there.”

Despite Netflix’s efforts to focus on its own course, the company’s shares dipped 6 per cent after hours, mainly due to a slight miss on revenue and profit targets for the quarter.

Netflix posted revenue of $11.51 billion, a tad below its guidance and Wall Street’s expectations, though up from $9.82 billion a year ago. The company expects to surpass earnings projections for the upcoming quarter, guiding to $5.45 per share versus analyst estimates of $5.42.

Even so, Netflix trimmed its 2025 operating margin forecast to 29 per cent from the previous 30 per cent, citing a tax-related impact. Still, it reaffirmed that full-year revenue should align with the high end of its $44.8 to $45.2 billion range.

Organic growth over acquisitions

Ted Sarandos made it clear that Netflix’s strategy remains unchanged: the company prizes building over buying. While Netflix keeps the door open to potential deals, it subjects every opportunity to a strict evaluation—will it genuinely strengthen Netflix’s offering, or would in-house development be a better bet?

“Nothing is a must-have for us to meet the goals we have for the business,” Sarandos reinforced, emphasising a selective approach and confidence in the streamer’s runway for organic growth.

Greg Peters, fellow co-CEO, reflected on previous seismic shifts in the media world, from Disney’s acquisition of Fox to Amazon purchasing MGM and the Discovery-Warner Bros. merger. He argued that such consolidations didn’t fundamentally transform the competitive landscape—nor does the current M&A chatter.

“Watching some of our competitors potentially grow bigger via M&A does not change [our] view on the competitive landscape.”

Tech-fueled vision

Both leaders highlighted that Netflix’s real challenge—and opportunity—lies in its relentless pursuit of building technology and creative capabilities. Peters spoke to the company’s ongoing integration of cutting-edge tools, especially artificial intelligence, to elevate everything from production efficiency to viewer experience and retention.

Citing the Argentinian sci-fi series “El Eternauta” as an example, Netflix is already leveraging generative AI to streamline visual effects, although human creativity remains at the core.

Sarandos wrapped up the earnings call on a confident note, underlining that while AI can empower creators, it won’t replace them. “We’re not worried about AI replacing creativity, but we’re very excited about AI creating tools to help creativity.”