The story of Netflix is the story of American capitalism.
The idea for the company was born when one of the founders was charged a late fee for returning a rented videotape. Anyone who lived in the 1980s or ’90s will remember both tapes and late fees, which could pile up if you misplaced a tape. Netflix came up with the idea of delivering rented DVDs through the mail: keep each as long as you like, return it when you are finished. No late fee.
Of course, as with all good capitalists, Netflix embraced disruption and put its own original model out of business. The company first moved on to providing entertainment on demand over the Web. It has since branched out. Netflix is no longer just a provider of content made by others; it also makes its own movies and TV shows, many of which win awards.
Netflix won’t suddenly stop and allow competitors to sail past it. It is thinking of ways to get bigger and better so it can deliver more value to subscribers. It is bidding to buy production house Warner Bros.
“This acquisition will improve our offering and accelerate our business for decades to come,” said Greg Peters, co-CEO of Netflix. “Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities.”
Peters’ co-CEO, Ted Sarandos, added: “Together we can give audiences more of what they love and help define the next century of storytelling.”
Of course, this isn’t sitting well with the crony capitalists who don’t want to see their model disrupted. Soon after Netflix offered to buy Warner Bros., Paramount jumped in with a bid for a larger stake in Warner Bros. Discovery, which was rejected and wouldn’t have been as good in the long term. Paramount followed up by making its bid public with a guarantee that is being characterized as a hostile bid.
It’s important to note that capitalism isn’t simply about maximizing prices; it is about maximizing opportunities. Because Paramount’s bid combines two companies that do the same thing in the same way, it would eliminate jobs and result in fewer entertainment choices, which is not good for the American economy or the entertainment industry. Paramount is already doing that after its merger with Skydance.
Paramount’s offer also depends on money that may not actually be there. It includes more than $20 billion from Saudi Arabia, Qatar and Abu Dhabi. The leaders of those Gulf states are less interested in quality content than in quick profits. An additional $40 billion would be equity financing from the personal fortune of Oracle mogul Larry Ellison, whose son runs Paramount.
The board of directors at Warner can see the same warning signs as anyone else. The board “unanimously determined that the tender offer launched by Paramount Skydance (‘PSKY’) on December 8, 2025, is not in the best interests of WBD and its shareholders and does not meet the criteria of a ‘Superior Proposal’ under the terms of WBD’s merger agreement with Netflix announced on December 5, 2025.”
These managers see that Netflix intends to keep operating Warner’s current movie-making businesses, which means feature films will continue to play in local cinemas for those who want that experience. It will also maintain HBO Max, which has brought amazing entertainment to the small screen and pairs well with Netflix’s production operation.
In fact, by combining Netflix’s innovation, amazing streaming service, and global reach with Warner Bros.’ great production process, Netflix plans to bring the best stories to the biggest audiences worldwide. That means delivering more value to creators, who will have a larger audience for their work.
Meantime, the agreement would allow the entertainment industry to expand and thrive. Netflix will be able to significantly expand production capacity in the United States and continue investing in original content over the long term, creating jobs. Netflix would aim to increase production capacity to create more opportunities for content makers and allow it to compete with YouTube and TikTok.
Increased competition means better products at better prices. That makes the Netflix offer a better deal for consumers, who will see more TV series and films available on the Netflix platform.
The entertainment industry is going to change, as all industries must. Netflix has a plan to leverage that change to improve its business model and consumer experience. Shareholders should celebrate capitalism by accepting this offer, rather than choosing Paramount’s risky bid.