• by Wayne Friedman , Staff Writer, 6 hours ago

Rumors about Netflix possibly being interested in buying Warner Bros. Discovery -- or for that matter, any legacy owned TV-network media company -- are headed for an obvious conclusion for some: No way.

Speaking at industry event earlier this week, Greg Peters, co-CEO of Netflix, was circumspect at best: “I would say this: We come from a deep heritage of being builders rather than buyers... One should have a reasonable amount of skepticism around big media mergers — they don’t have an amazing track record over time.”

The honest approach here -- at least, probably according to Peters and other digital-first streaming video executives and companies -- is that even when securing valuable pieces of legacy media companies such as movie and TV studio operations, companies like Netflix would still be weighed down by what to do with those cable TV networks.

In the case of Skydance Media, with the purchase of Paramount Global for an $8 billion figure, the studio operations were a key goal.

And while cable TV networks are still part of the overall deal, Paramount also owned CBS -- still a large broadcast network and one with still-decent value, considering its reach for advertisers.

More value for WBD comes from its HBO library, where it still makes decent business from content sales of its popular shows like “Game of Thrones," “Sex And the City” and “The Sopranos,” among hundreds of others.

Even then, co-founder/media analyst of LightShed Partners Rich Greenfield says: “While HBO certainly has some great catalog IP, the business remains tied to the legacy multichannel ecosystem, with an increasing array of wholesale distribution relationships spanning Amazon Prime, Charter, and DirecTV. Why would Netflix want to deal with all those entanglements?”

Exactly. 

Going forward, however, it isn’t only the studio operations for Warner Bros. but the intellectual properties (IP) itself where a company like Netflix, or other buyers, could see some strong results.

Warner Bros. remains a strong operation. Consider that this year the studio’s theatrical movies have been on a mega-roll -- leading all Hollywood studios with just three months left of the year to go.

Its successes include “A Minecraft Movie,” $958 million in box office revenue, “F1: The Movie” ($624 million), “Superman” ($615 million”) and “The Conjuring: Last Rites” ($404 million). Five Warner Bros. movies have opened in first place so far this year.

While Netflix would love this kind of dominance in the theatrical business world, for all its strong financial growth, it would still need some help in a mega-deal like this.

“Netflix is simply not going to spend $75 billion to $100 billion to acquire Warner Bros Discovery,” says Greenfield. 

Why so high when Paramount's price tag was only $8 billion for Skydance? While WBD’s current market cap is $47 billion, it still has $30 billion of net debt to be paid off.

Perhaps the only likely scenario would be for Paramount to buy some of those cable TV businesses and merge them with their own cable networks -- giving them stronger marketplace share compared to remaining players.

But Netflix is in a great position right now. Because existing legacy studios are, according to Greenfield, “increasingly desperate to license to Netflix.”

What about the overall perspective from those dealing with legacy media and needed program deals? When asked about Paramount seemingly overpaying $7.7 billion for UFC rights, Peters remarked: “Go with God and try to monetize the heck outta that.”