Ted Sarandos: AT&T-Time Warner ‘Sure’ to Face DOJ Scrutiny

Netflix chief content officer Ted Sarandos weighed in on the pending AT&T-Time Warner merger Saturday, predicting the deal will face some regulatory questions.

“It’s a tough hypothetical, mostly because deals of this size in the industry are unprecedented. I’m sure it’s going to have a lot of DOJ scrutiny,” he said at USC’s Entertainment Law and Business conference, in a keynote Q&A with entertainment attorney Bruce Ramer.

“How it impacts anybody will be highly dependent on how it emerges,” said Sarandos. “Those are pretty powerful assets. I’m sure it will come under a great deal of scrutiny.”

The Department of Justice, as well as the FCC, could conceivably take a hard look at a Time Warner-AT&T combination, but there has yet to be any indication from either government body as to what action they will take.

Sarandos also defended the streaming service against any suggestion that he’s creating a “monopoly.”

Ramer brought up the question that FX Networks CEO John Landgraf had raised during the summer’s Television Critics Association press tour, when Landgraf said, “I think it would be particularly bad for storytellers and for our culture if any one company — and I don’t care what company that is — were able to seize a 40 or 50 or 60 percent market share within storytelling. I don’t think monopoly market shares are good for society, and I think they’d be particularly bad for society and storytellers if they were achieved in the storytelling genre.”

Ramer also quoted Landgraf, who’d said: “Television shows are not like cars or operating systems, and they’re not made best by engineers or coders in the same assembly line as consumer products, which need to be uniform size shape and quality.”

Responded Sarandos, “Who would make TV like that? We don’t. I don’t know where he gets that. I don’t know how he said that with a straight face.”

Sarandos continued, “The edge that we might have is in our technology roots. We make data-driven hunches. We make informed intuition. We have data on what shows people watch. We can’t reverse-engineer great storytelling. We can create a better business model for it.”

The biggest difference between FX and Netflix, countered Sarandos, was on taking credit when shows succeed. “I don’t think you can corral storytellers, and have them write to your vision and be successful at it for very long,” he said. “You won’t hear me take credit for our shows. That credit belongs to the storytellers. I’m not writing. I’m not directing.”

And he challenged Landgraf’s use of the word “monopoly.” “I’m sure John Landgraf knows the definition of that word and what a loaded word that is and how foolish it is to say,” he says. “Considering how much storytelling and television creation and movie creation is happening all over the world….We’re operating around the world. It’s a big world of storytellers. It’s impossible to monopolize.”

Sarandos also made a joke at Relativity CEO Ryan Kavanaugh’s expense, when Ramer asked about his infamous algorithm predicting what films would succeed financially. “How did that work out?” quipped Sarandos of Relativity, which has been embroiled in a longstanding legal dispute with Netflix.

Asked his thoughts on Amazon Prime, Sarandos credits Netflix’s singular focus on content for their success vs. their competition. “I think they’re betting video is a better way to sell Prime than other things,” he said. “If we were shipping diapers I don’t know if we would be as successful at this. That’s why there’s very little engagement in that product [Prime] today.”

Sarandos acknowledged his ongoing battle with theater owners of “day and date” releases as Netflix expands their film efforts, comparing the concept of “day and date” to drinking a beer: “You can drink a beer at home or you can go to a bar,” he said. But he pointed the finger at theater owners, saying they needed to invest in improving the theater-going experience. “If you do that you don’t have to hold the content hostage,” he said. “It’s the lack of innovation that’s been hurting movies terribly. The reason that television’s gotten so great is all the distribution innovation, which expanded the audience. Now TV shows are displacing movies in the culture.”

Sarandos also addressed the renewal rate for Netflix series, none of which have been cancelled in their first season.

“That’s by creative design,” he said. “We built shows for longevity. They’re designed to be long-running shows. One or two seasons is not the definition of success. Four, five or six season shows, those are the successful shows.”

Given the current political climate, Ramer couldn’t resist asking about Sarandos’ own political ambitions. “No, I have no political aspirations whatsoever,” he said. “[But] I do love politics both as a concerned citizen and as a supporter.”

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