Netflix has long been a “builder, not a buyer.” Is this era over?

For years, Netflix The top brass will tell investors that they are builders, not buyers. Now that feeling about growth may change.

Netflix on Thursday reported its quarterly earnings. Netflix’s earnings calls typically focus on metrics like engagement, content spending, price increases, and membership. While these factors were still present on Thursday’s call, analysts were also skeptical of Netflix’s M&A aspirations post-crisis. Warner Bros. Discovery Sales process.

Late last year, Netflix emerged as a bidder for WBD, surprising many in the industry and market. Even more surprising was the announcement in December that Netflix had reached a deal to acquire WBD’s film studio and streaming assets in a deal worth $72 billion.

Although the deal initially raised eyebrows, it has now opened the door to questions from media onlookers and insiders about whether the company needs to pursue other deals as streaming becomes more competitive.

Questions have also been raised internally and externally about the company’s ability to pull off such a massive deal, Netflix co-CEO Ted Sarandos said Thursday.

“But what we learned is that our teams were up to the task,” Sarandos said. “We learned a lot about deal execution, about early integration.”

Netflix said its logic was simple when it came to pivoting toward a major acquisition. Despite being the largest streaming service ever when it comes to subscribers — a reported 325 million global paid members in January — it wanted to deepen its bench of franchises and intellectual properties, and get more directly into the movie studio business.

Paramount Skydance Ultimately, it upended the deal in February with a superior offer, and Netflix pulled out (and collected a $2.8 billion breakup fee in short order).

“But mostly, we’ve built our muscle in mergers and acquisitions,” Sarandos said. “However, the most important benefit of this entire process is that we have tested our investment discipline.”

Sarandos’ newfound openness to mergers and acquisitions has left some wondering if the streaming giant could be looking for new targets.

After all, its intellectual property library and relationship with the movie studio business are still where they were before it struck the WBD deal.

Although Wall Street wasn’t a fan of Netflix’s proposed acquisition of WBD — shares fell 15% between the deal’s announcement and the day it collapsed, and have since risen about 26% — the media landscape would be undeniably different if the Paramount takeover were approved.

Paramount is seeking to buy WBD’s entire business — the cable TV networks, movie studio, streaming and everything. This would create a huge competitor to Netflix and its media peers on various fronts.

“The way the WBD cards fell is very important. The potential combination of Paramount+ and HBO Max is changing the streaming landscape in ways that Netflix has never had to confront before,” Mike Proulx, vice president and director of research at Forrester, said before Netflix’s earnings call.

“I just want to remind you that we said from the beginning that the World Bank deal was a nice-to-have, not a necessity. We are very confident in the underlying business,” Sarandos said on Thursday. He added that Netflix considered its biggest risk in the deal process to be losing focus on its core business.

“As you can see from the first quarter results, we have not lost focus,” he said.

However, Netflix’s earnings report, especially its forward-looking guidance, appears to have disappointed investors.

The company’s stock fell nearly 10% in extended trading after the streamer maintained full-year guidance despite better first-quarter revenue and the termination of the WBD deal.

“The biggest surprise this quarter was the unchanged full-year margin guidance despite the move away from the Warner Bros. deal and related M&A costs,” analyst Robert Fishman of MoffettNathanson said in a research note on Friday.

For its part, Netflix didn’t spend much time on M&A during the earnings call, instead focusing on more popular talking points like user engagement, its growing ad business, and content spending that retains members (and helps justify higher prices).

The return to Netflix’s typical narrative seems welcome.

“After WBD, the company can return to its continued focus on growing revenues and profits by leveraging global subscriber volume,” Fishman said in a note on Friday. He added that Netflix management “emphasized the success of recent price increases and indicated that retention has been strong,” as well as that it remains on track to double advertising revenues this year.

However, Forrester’s Proulx said in a note after the earnings call that although Netflix is ​​back “directly focused on executing its tried-and-true playbook,” questions remain.

“None of this changes the fact that the streaming market is more competitive than it was a year ago,” Proulx said. “Pricing power must be gained quarter by quarter, and staying engaged as prices rise remains the key challenge across the streaming market. Netflix is ​​betting that steady execution of its core business wins out in a more crowded and consolidated market.”