Peters said that media companies will have to rationalize their businesses for the reality of on-demand and streaming.

Warner Bros. Discovery’s (WBD) plans to split the company into two is the result of a broader “shakeout” in the entertainment industry due to the increasing adoption of streaming services, said Netflix co-CEO Greg Peters.

In an interview with Bloomberg at the Founders Forum Global conference, Peters said content is shifting to a streaming and on-demand model.

“There’s going to be a period of shakeout and transition associated with that.”

Peters said that media companies must rationalize their businesses to accommodate the reality of on-demand and streaming. As for the Warner Bros. Discovery split, he said, “We’re definitely seeing the results of that.”

He also thinks there could be mergers in the industry as companies adjust their strategies for market demands. “There’s an inevitable logic to that,” he said.

As for Netflix’s strategy, he said the company has not usually gone for acquisitions. “Our track record is we’re builders. We’re not buyers,” he said but added that the company is looking at ways to grow its intellectual property bank.

Peters’ comments come days after Warner Bros. Discovery announced plans to split the company into two by 2026, separating its streaming and studio business from its networks business.

The Streaming & Studios company will include Warner Bros. Television, Warner Bros. Motion Picture Group, DC Studios, HBO, and HBO Max.

The Global Networks company will include entertainment, sports, and news brands, including TNT Sports in the U.S., CNN, Discovery, Bleacher Report, and the Discovery+ streaming service. It will also include free-to-air channels in Europe.

The shakeup at Warner Bros. Discovery comes four years after a merger of WarnerMedia and Discovery. 

There have been other media companies that have undergone mergers and spin-offs in the past. This includes the Viacom-CBS merger in a deal worth $35.6 billion in 1999, and seven years later, they split into broadcast and cable companies.

Again, in 2019, the two companies merged their businesses to form ViacomCBS, which was then rebranded as Paramount Global in 2022. The newly formed entity is now preparing to finalize its merger with Skydance Media.

Streaming giant Netflix’s stock has surged nearly 37% year-to-date and almost 88% over the past 12 months.

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