Netflix Co-CEO Ted Sarandos underestimated President Donald Trump.
He went into Thursday’s meeting at the White House brushing off Trump’s attacks on Netflix board member Susan Rice as bluster – even as he hoped to build good will for his company’s high-stakes bid for Warner Bros. Discovery, according to three people familiar with the discussions who were granted anonymity to speak candidly.
Trump demanded last month that Netflix fire Rice or “pay the consequences,” calling the former top adviser to President Joe Biden a “racist” and “deranged.”
But Sarandos refused.
“He didn’t fully grasp how big of a deal the Susan Rice demands were,” said one of the three people.
On Thursday, Netflix announced it was walking away from its bid for Warner Bros. saying “the deal is no longer financially attractive,” Netflix was competing against Paramount Skydance, which sweetened its offer to $31 per share and whose CEO David Ellison is the son of Larry Ellison, chairman of tech giant Oracle and close Trump ally.
A White House official, granted anonymity to discuss the potential acquisition, insisted that Rice had nothing to do with why Netflix lost the deal.
It was “100 percent because of the bid,” the official said. “Netflix could have submitted an alternative offer and they chose not to.”
A person familiar with the thinking said Trump promised to remain neutral “and he has.”
Still, the episode underscores how more than 10 years after Trump came down the escalator, many of the country’s most powerful figures still sometimes misjudge or underestimate the president.
Even a year into a second term, D.C. lobbyists must explain to corporate America — not just Netflix — how Trump works.
A GOP lobbyist, granted anonymity to speak candidly, said at times corporate America thinks things will move in a straight line.
“They’re slowly learning that sometimes you can't bet on that because [Trump] wants to take a piece of it,” the person said. “He wants to be the one that raises the trophy. In a transaction, what’s in it for him, what’s in it for the administration, what can he take credit for?”
By mid-December, after Netflix’s bid was announced and markets began pricing it as the winning offer, a GOP consultant, granted anonymity to speak candidly, recalled telling clients, “I just think the president's going to want to weigh in” based on the focus he has on media companies and Ellison connection.
“From the outside, they were thinking, Netflix won the bid. It was announced. And now the question is does it get DOJ clearance. I don’t think there’s appreciation of the way this president operates of wanting to put his finger on the scale of everything,” the person said.
Ahead of Sarandos’ meeting, Warner Bros. said Paramount Skydance’s revised offer was superior and shortly after, Netflix announced thatit wouldn’t match.
In a statement a Netflix spokesperson said, “Our decision not to increase our offer reflects our disciplined financial approach and our clear assessment of value, and was not driven by regulatory considerations of any kind. We continue to believe that the transaction we negotiated would have created meaningful shareholder value and offered a clear, achievable path to regulatory approval.”
Multiple lobbyists also told POLITICO that corporate America has also been slow to understand that getting Trump’s personal approval is the way through the regulatory process. Once the president, typically with a handshake in the Oval Office, approves a deal, the battle through government red tape is easier.
Sarandos’s trip last week was his second to D.C. He visited Trump in November just before Netflix announced its intention to acquire Warner Bros.
Sarandos wanted to use his first meeting with the president in November and this one as a way to build a relationship with Trump that would outlast the Warner Bros. deal, according to a person familiar with Netflix’s discussions.
He approached his meeting last week with Justice Department regulators, including Attorney General Pam Bondi, prepared to press his case and fight for regulatory approval while seeking a by-the-book review of Netflix’s potential bid for Warner Bros. Discovery, a person familiar with the discussions told POLITICO. But there were deeper sources of tension.
CNN is a division of Warner Bros and the president has not shied away from bashing the network for its coverage, seeing it as “fake news.” When David Ellison’s media company, Skydance, took over Paramount, which owns CBS, last year, it made major changes to the network like making Bari Weiss editor-in-chief.
The White House pushed back on the idea that Trump’s relationship with the Ellisons and distaste for institutional media were factors at play.
“The president has good relationships with lots of folks but there’s a difference between having good relationships and putting our finger on the scale to benefit them and that didn’t happen here,” the White House official said.
Sarandos knew he was playing catch-up in Washington, according to people involved with last week's meetings, particularly against the perception that the Ellison family already had the president’s ear. Even if the influence was overstated, people familiar with the thinking said the imbalance mattered.
“If you’re trying to play the who’s closer to the White House game, you can’t compete on that level,” said the person familiar with Netflix’s internal dynamics granted anonymity to speak freely, pointing to Larry Ellison’s years-long relationship with Trump.
Instead, the person said, Sarandos’ strategy was to lean into what Netflix could control – making the case that its bid was the better deal on merits: good for consumers, jobs, Hollywood and American industry.
“You’ll never win the ‘we’re better buddies’ argument if you’re up against the Ellisons,” said the person. “So he made the argument that Netflix makes sense for the market and for the country.”
Asked about Susan Rice, Netflix pointed to a statement Sarandos made to Bloomberg on Sunday: “I don’t want or expect our board members to be out talking about politics ever, let alone in the middle of a deal, but they do have the right to speak, and she wasn’t speaking for Netflix.”
The effort in Washington did not ultimately salvage Netflix’s pursuit of Warner Bros. But by declining to re-up its bid after Paramount’s offer was deemed superior, Netflix walked away with a sizable breakup fee baked into its original agreement.
“Netflix made almost $3 billion, it was a good day,” the person said, underscoring that while Sarandos may not have secured the outcome he wanted in Washington, the company didn’t leave empty-handed.
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