The apprentice didn't surpass the master, he bought the school

Posted on: 7 December 2025

This post is different from the usual.

It's not a structural analysis in the classic sense. It's a story. But it's also an analysis, with a surprise ending. Because even those who spend their lives recognising patterns, and I've been doing it for forty years, sometimes get caught off guard. When Netflix announced the acquisition of Warner Bros. for $82.7 billion on 5 December 2025, I had to stop. Not because I hadn't seen the signals. But because the mechanism that manifested was something that, in hindsight, made perfect sense, yet no one, myself included, had truly anticipated in its final consequences.

This is the story of how content, born as art, unwittingly became the protagonist of a century-long thriller. A story of showmen, conglomerates, deluded telecoms and digital barbarians. With a final twist that upends everything.

Make yourselves comfortable. The film is about to begin.

Act one: the age of innocence

Hollywood, the 1920s. Content is born as art, or at least as craftsmanship of the highest order. The studios are workshops, enormous workshops, certainly, but workshops nonetheless, where the final product is the dream. Louis B. Mayer at MGM, the Warner brothers, Adolph Zukor at Paramount: they are showmen before businessmen. Entrepreneurs of wonder. The MGM lion roars because someone truly believes in it.

In this phase, content is the end, not the means. Of course, money is made, lots of money. But the money is the consequence of the magic, not its purpose. The studios control everything: production, distribution, cinemas. It's total vertical integration, but driven by an industrial-artisanal logic. Make the best film you can, bring it to your theatres, collect the spoils.

Then comes 1948. The Supreme Court, in United States v. Paramount Pictures, rules that studios can no longer own cinema chains. It's the end of the vertical system. The studios must choose: production or final distribution? They choose production. They separate from the theatres.

At that moment, no one understands what has actually happened. Content, this abstract entity made of stories, characters, imaginary worlds, has been freed from the golden cage of total control. For the first time, it can circulate. It can be bought and sold separately from its original value chain.

Content has become, without knowing it, an asset.

Act two: the fall

The 1960s and 70s bring the first predators. Industrial conglomerates discover Hollywood. Gulf+Western, a company that makes everything from zinc to car shock absorbers, buys Paramount in 1966. The idea is simple: diversification. A film studio is an asset like any other. It produces cash flow. It can be managed.

Thus begins the long season of content as commodity. Coca-Cola buys Columbia Pictures in 1982. Think about it for a moment: a fizzy drinks company owning a studio that produced Lawrence of Arabia. The logic? None, except financial. Columbia was undervalued, had an interesting catalogue, could be "optimised".

Content, in this phase, suffers. It has no voice. It's an asset that changes hands, valued according to financial multiples by analysts who have never watched a film in their lives. But content has a characteristic that normal assets don't have: it's alive. It needs talent to be created, passion to be nurtured, competence to be distributed.

The conglomerates don't understand this. And indeed they fail. Coca-Cola sells Columbia to Sony in 1989. Gulf+Western transforms, changes its name, eventually cedes Paramount to Viacom. Content survives its temporary masters, like a king in exile waiting for the right moment to return.

The telecoms illusion

But the true hubris arrives with telecommunications. The 1990s and 2000s. The telecoms have the pipes, the cables, the networks, the infrastructure, and are desperately seeking something to put inside them. "Content is king", Bill Gates proclaims in 1996. Everyone repeats it without understanding it.

Vivendi, the French water and utilities giant, buys Universal in 2000. The idea is "convergence": whoever owns the pipes and the content will dominate the future. Jean-Marie Messier, the visionary CEO, proclaims himself "master of the universe". Three years later he's out, Vivendi is nearly bankrupt, Universal is sold off cheap.

But the most spectacular disaster is AOL-Time Warner. January 2000: AOL, a dial-up internet provider with 30 million subscribers, announces the acquisition of Time Warner for $182 billion. It's the largest merger in American history. The magazines speak of a "new paradigm". Wall Street applauds.

It's also the greatest destruction of value in history. Within two years, the dot-com bubble bursts, AOL loses half its subscribers because it can't make the transition to broadband, and the merger is labelled "the worst ever". In 2002, the combined company records a loss of $99 billion. Ted Turner, who had sold his Turner Broadcasting to Time Warner, loses 80% of his personal fortune.

The pattern is always the same. Someone who doesn't understand content buys content thinking it's an asset like any other. Content, silently, loses value in the wrong hands. The buyer fails. Content survives and waits for its next master.

AT&T tries again in 2018, buying Time Warner (now separated from AOL) for $85 billion. Same script: promised synergies, failed integration, separation three years later with billions in losses. Content, once again, is freed. Battered but alive.

Up to this point, the story seemed to have a clear moral: content cannot be owned by those who don't understand it. It's a rebellious asset that punishes incompetent masters.

But the story wasn't over. It was just preparing the twist.

Act three: the black swan

Netflix is born in 1997 as a DVD rental-by-post service. A modest, almost artisanal idea. Reed Hastings and Marc Randolph simply want to avoid the late fees that Blockbuster imposes on its customers. They have no intention of conquering Hollywood.

Amazon launches Prime Video in 2006 as an ancillary service to convince people to pay for Prime membership. Jeff Bezos wants to sell more books and nappies, not make films.

Yet something different is happening. These new players aren't industrial conglomerates seeking diversification. They're not telecoms seeking content for their pipes. They're technology companies building something completely new: platforms for direct-to-consumer distribution, without intermediaries, with granular data on what people want to watch.

Initially, the traditional studios are happy to sell Netflix licences to their content. Easy money. A Disney executive will admit years later: "I woke up one day and thought we were basically selling nuclear weapons technology to a third world country, and now they're using it against us."

That's exactly what was happening. Netflix uses the studios' content to build its subscriber base. It learns what works. It accumulates data. And then, when it's strong enough, it starts producing its own content. House of Cards in 2013 is the moment everything changes. The distributor has become a producer. The apprentice challenges the masters.

The studios react in the predictable way: panic. Each one builds its own platform. Disney+, HBO Max, Peacock, Paramount+. The idea is logical on paper: why give our content to Netflix when we can go directly to the consumer?

But there's a problem. Building a global platform requires billions. Requires years. Requires technological competencies the studios don't have. And above all, requires consumers to be willing to manage ten different subscriptions to watch all the content they want.

They're not. Human beings are lazy. They seek the path of least resistance. Between ten different apps and one that has almost everything, they choose the one that has almost everything.

Meanwhile, interest rates rise. Money is no longer free. Wall Street stops rewarding subscriber growth and starts demanding profits. Warner Bros. Discovery finds itself with $40 billion in debt and a streaming platform that can't compete.

The reversal no one predicted

Amazon makes the first move in 2022. It buys MGM, the studio of the roaring lion, of James Bond, of Rocky, for $8.5 billion. It's the first time a technology company born as a distributor acquires one of the great historic studios. But MGM is relatively small. The market notes the news and moves on.

Three years later, on 5 December 2025, the real earthquake arrives. Netflix announces the acquisition of Warner Bros., including HBO, HBO Max, DC Comics, Harry Potter, the entire catalogue, for $82.7 billion. Not a licence. Not a partnership. A total acquisition.

Ted Sarandos, Netflix's co-CEO, admits it in the analyst conference call: "I know some of you are surprised by this acquisition. Over the years we have been known as builders, not buyers."

Here's the black swan. It's not surprising that someone bought Warner. What's surprising is who bought it and why.

For the first time in a hundred years of Hollywood history, the disruptor that had disintermediated the studios now owns them. Not a private equity fund. Not a telecom seeking synergies. Not a conglomerate seeking diversification. But the company that had challenged them, that had learned to do their job, and that now had the money to buy them.

It's as if Spotify bought Universal Music. Or Uber bought Hertz. The apprentice hasn't just surpassed the master: he's bought the school.

The final twist: content always won

Let's pause for a moment to look at the complete arc of this story.

Content is born as art in the hands of showmen. It's separated from its value chain by the Supreme Court. It becomes an asset in the hands of conglomerates, who don't understand it and fail. It passes to telecoms, who understand it even less and fail even more spectacularly. It's used as bait by digital distributors, who however, unlike all their predecessors, learn to create it themselves.

And in the end? In the end, content returns to the hands of someone who understands it. Netflix is not AOL. Netflix knows how to make content. It has spent fifteen years learning, making mistakes, understanding what works and what doesn't. It has built a global distribution infrastructure that no one can replicate. It has 260 million subscribers who open the app every day.

The mechanism that no one predicted, myself included, is this: when the disruptor reaches organic saturation and can no longer grow by building, it must grow by buying. And at that point it has the money, the competence and the distribution to buy those it wanted to destroy.

But there's a deeper irony. In a sense, content has always won. It has simply changed masters until it found someone who understood it.

The conglomerates of the 1960s? Failed. The telecoms of the 1990s? Failed. AOL? Gone. AT&T? Retreated. Content is still there. Warner Bros. still exists. HBO still exists. The MGM lion still roars, now under Amazon's logo.

Content is patient. Content waits. Content survives its incompetent masters and rewards those who respect it.

Perhaps "content is king" meant exactly this, from the very beginning. Not that content was powerful in an active sense. But that it was sovereign in a passive sense: everyone must come to it, sooner or later, on its terms.

Netflix understood this. And that's why it won.

A note in the margin

When I started writing this post, I thought I was commenting on a licensing agreement. While I was writing, Netflix bought Warner. It's a useful reminder: patterns help us understand, but reality always moves faster than our analyses. Sometimes, the only honest thing to do is admit we were surprised, and try to understand why.