In a packed room at library in a downtown Boston, Rep. Ayanna Pressley posed a blunt question: Why are Black women, who have some of the highest labor force participation rates in the country, now seeing their unemployment rise faster than most other groups?
The replies Monday from policymakers, academics, business owners and community organizers laid out how economic headwinds facing Black women may indicate a troubling shift for the economy at large.
That compares with a 3.2% to 3.4% increase for white women over the same period. And it extended a year-long trend of the Black women’s unemployment rate increasing at a time of broad economic uncertainty.
Many roundtable attendees view those numbers as both an affront and a warning about the uneven pressures on Black women.
“Everyone is missing out when we’re pushed out of the workforce,” said Pressley, a progressive Democrat. “That is something that I worry about now, that you have all these women with specific expertise and specializations that we’re being deprived of.”
And when Black women do have work, she said they tend to be “woefully underemployed.”
Black women had the highest labor force participation rate of any female demographic in 2024, according to the Bureau of Labor Statistics, yet their unemployment rate remains higher than other demographics of women.
Historically, their unemployment rate has trended slightly above the national average, widening during periods of slowed economic growth or recession. Black Americans are overrepresented in industries like retail, health and social services, and government administration, according to a 2024 Bureau of Labor Statistics Survey.
“Black women are at the center of the Venn diagram that is our society,” said Anna Gifty Opoku-Agyeman, a PhD candidate in public policy and economics at the Harvard Kennedy School.
She pointed to April as the month when Black women’s unemployment began to diverge more sharply from other groups. A policy agenda that ignores the causes, she said, could harm the broader economy.
Roundtable participants cited many long-standing structural inequities but attributed most of the latest divergence to recent federal actions. They blamed the Trump administration’s downsizing of the Minority Business Development Agency and the cancellation of some federal contracts with non-profits and small businesses, saying those actions disproportionately impacted Black women. Others said tariff policies and mass federal layoffs also contributed to the strain.
The administration’s opposition to diversity, equity and inclusion initiatives was repeatedly mentioned by participants as a cause for a more hostile environment for Black women to find employment, customers or government contracting.
There is no concrete data on how many Black federal workers were laid off, fired or otherwise dismissed as part of President Donald Trump’s sweeping cuts through the federal government.
The attendees discussed a wide range of potential solutions to the unemployment rate for Black women, including using state budgets to bolster business development for Black women, expanding microloans to different communities, increasing government resources for contracting, requiring greater transparency on corporate hiring practices and encouraging state and federal officials to enforce anti-discrimination policies.
“I feel like I was just at church,” said Ruthzee Louijeune, the Boston City Council president, as the meeting wrapped up. She encouraged attendees to keep up their efforts, and she defended DEI policies as essential to a healthy workforce and political system. Without broad-based efforts, the Democrat said, the country’s business and political leadership would be “abnormal” and weakened.
“Any space that does not look like our country and like our cities is not normal,” she said, “and not the city or country we are trying to build.”
Netflix’s $72 billion play for Warner Bros. is as much a bet on the future of artificial intelligence (AI) and chips as it is on movies and shows, according to a top Wall Street analyst, who said in an interview with Fortune the deal cannot be understood without looking at Google’s technology ambitions.
Amid cries from the jilted Ellison family about a “tainted” sale process and indie producers and theater owners of the “death of Hollywood,” Melissa Otto, Head of Research at S&P Global Visible Alpha, sees a different game being played. Otto said she thinks the tech angle of the industry is being overlooked.
“I think there’s this much bigger conversation that is being missed,” she said: Google and its TPU chips.
A key question for the future of entertainment, Otto told Fortune, is control over premium video at massive scale in an era when generative AI will increasingly create, remix, and personalize moving images. (Otto called it the “video corpus” that will train and power the next generation of AI models.) Over the long term, Otto added, that is a key part of the mystery behind why Netflix, long a builder rather than a buyer, would make Hollywood history by taking out one of its biggest rivals and one of the town’s prestige legacy studios.
Co-CEO Greg Peters was asked a blunt question about that same thing this morning on the call with analysts about the historic merger. Rich Greenfield of LightShed Partners cited Peters’ own previous statement at a Bloomberg conference about how there’s a long history of failed media mega-mergers, so he questioned: “Why is this going to end differently than every other media transaction essentially of this scale and history?”
Peters, while clarifying his remarks at the conference were a bit more nuanced, acknowledged “historically, many of these mergers haven’t worked, some have, but you really got to take a look at this on a case by case basis.” Still, Peters argued most previous big deals showed a lack of understanding about the underlying business, and Netflix understands these assets and has a “clear thesis about how the critical parts of Warner Brothers accelerate our progress.” He also acknowledged Netflix isn’t expert at doing large-scale M&A.
After all, this is expensive. “We are surprised that Netflix felt the need to spend $80bn+ and pay a premium for something Netflix disrupted,” Barclays analysts wrote in reaction to the deal, “and it is not clear what problem or opportunity Netflix is solving for that couldn’t have been achieved organically.”
In a statement emailed to Fortune, Dave Novosel, a Gimme Credit senior bond analyst, said the deal looks expensive to him as well, with Netflix assuming nearly $11 billion of debt.
“While the WBD assets bring an amazing amount of attractive content, NFLX is paying a steep EBITDA multiple of more than 25x, which seems extravagant,” Novosel wrote. Once it reaches the advertised synergies, he added, the resulting multiple of closer to 15x seems more reasonable. While those are pending, “the huge amount of debt that Netflix will need to raise to fund the deal will take leverage to well more than 4x initially.” Novosel wrote investors may need to be patient. Bloomberg’s credit team, meanwhile, reported the $59 billion bridge loan being taken out to finance this deal is among the biggest in corporate history.
Here’s what Otto sees happening in Northern California, far from Tinseltown, where the Warner deal is all anybody can talk about, and why Netflix took such a big swing.
Is the future of entertainment Northern or Southern California?
Part of Netflix’s thesis, according to Otto, is that it’s a tech company at heart and it recognizes Google’s rapid advancements in AI, particularly its advancements in TPU chips.
“What TPU chips do really, really well is in the modality of video in generative AI,” Otto said, as they essentially turn mathematical representations into moving pictures in much the same way GPUs revolutionized natural language AI by tokenizing and modeling text. Instead of ChatGPT and text, think Gemini 3 and YouTube videos.
Netflix already trails YouTube in total share of streaming time, with Bank of America Research recently citing Nielsen data showing YouTube held 28% of U.S. streaming, versus Netflix’s 18%. Otto said this threatens to go up another notch when and if Google’s TPU chips turbocharge content made with generative AI.
“I’m sure that it’s feeding into the strategy,” Otto said. “If I were Netflix and I knew that Google, one of their formidable competitors, had this chip technology and was essentially plowing billions and billions of dollars into developing the infrastructure so that they could carve out the corpus of the video modality in generative AI, I would want to build a moat around my business.”
On the surface, Netflix is buying a legacy studio with a deep library, beloved franchises, and a global brand—and paying up to do it. The combined streaming and studio business generates about $25 billion in revenue and roughly $4 billion to $5 billion in EBITDA, but margins on streaming remain thin, making the economics of the deal look tough in the near term. Executives have emphasized overlapping subscribers, obvious cost cuts and an expected $5.5 billion in efficiencies, the kind of “low‑hanging fruit” that can occupy management for the next 12 to 24 months, Otto said.
But in a world where TPUs can make high‑quality video “basically for free,” any player lacking both the chips and the content could find itself outgunned as AI reshapes how entertainment is produced and consumed. That makes Netflix’s big splash for Batman, Harry Potter, and the like a different kind of moat, and a different kind of game than the classic Hollywood rivalries of yore. Otto said it was plausible generative AI entertainment could be seen as an extension of the recent IP wars that saw Hollywood deluged by floods of superhero movies and sequels, with Disney’s Marvel Studios ushering in a computer generated revolution in the 21st century. “I think that’s not an outrageous assumption.”
By absorbing Warner Bros., Netflix increases the volume and diversity of content it can feed into recommendation systems, experimentation and, eventually, its own AI‑driven video tools. Otto also noted the deal potentially gives Netflix more exposure to advertising, an area in which Alphabet has dominated and where Warner Bros. still generates $6 billion–$7 billion in ad revenue. While the ultimate destination of that ad talent remains unclear, as they may go to the spinco that includes WBD’s cable assets such as CNN and TNT. (Netflix has only been active in ads since 2022, having been a premium subscription service since it pivoted from DVD rentals to streaming in the late 2000s.)
Imagine a world, Otto said, where you could create your own versions of the crime classic Columbo starring an AI-generated version of legendary actor Peter Falk, who died in 2011. (Columbo had several homes on TV on neither Warner Bros. nor Netflix, as it was first an NBC property in the 1970s, and then an ABC property from the late ’80s onward.) “In this day and age, boy, wouldn’t it be interesting?” Otto asked rhetorically.
In many ways, she added, this moment is remarkable because Netflix may end up neither a subscription nor an advertising business, but an AI-based one that doesn’t quite exist yet. “It’s kind of exciting because it means that it’s anybody’s game,” Otto said.
Otto also raised the spectre of TikTok, the social media giant partially under the control of Larry Ellison.
“They’re a formidable competitor as well,” she said. What’s likely, she added, is the future will be unpredictable. The rise of AI “could provide some really amazing innovation over the next couple of years.” She agreed it could create a bonanza for show business lawyers who wrangle over the rights of things like the likeness of Falk, which was a major issue in the recent Hollywood strikes.
“That may be the real story,” she said.
[Disclosure: The author worked internally at Netflix from June 2024 through July 2025.]
Netflix Inc. agreed to buy Warner Bros. Discovery Inc., marking a seismic shift in the entertainment business as a Silicon Valley-bred streaming giant tries to swallow one of Hollywood’s oldest and most revered studios.
Under terms of the deal announced Friday, Warner Bros. shareholders will receive $27.75 a share in cash and stock in Netflix, valuing the business at $82.7 billion including debt. The total equity value of the deal is $72 billion. Warner Bros. will spin off cable networks such as CNN and TNT into a separate company before concluding the sale of its studio and HBO to Netflix.
Media mergers of this scale have a rocky history and this one is expected to bring intense regulatory scrutiny in the US and Europe. The deal combines two of the world’s biggest streaming providers with some 450 million subscribers. Warner Bros.’ deep library of programming gives Netflix content to sustain its lead over challengers like Walt Disney Co. and Paramount Skydance Corp.
The acquisition, which confirmed a Bloomberg report Thursday, presents a strategic pivot for Netflix, which has never made a deal of this scope in its 28-year history. With the purchase, Netflix becomes owner of the HBO network, along with its library of hit shows like The Sopranos and TheWhite Lotus. Warner Bros. assets also include its sprawling studios in Burbank, California, along with a vast film and TV archive that includes Harry Potter and Friends.
“I know some of you are surprised we are making this acquisition,” Netflix co-Chief Executive Officer Ted Sarandos said on a call with analysts Friday. He noted that Netflix has traditionally been known to be builders, not buyers. “But this is a rare opportunity that will help us achieve our mission to entertain the world.”
Netflix shares were down 3.5% Friday afternoon in New York. They have declined about 17% since the streaming leader emerged as an interested party in October. Some investors and analysts have interpreted this deal to mean Netflix was worried it couldn’t expand its current business, a theory co-CEO Greg Peters dismissed.
Warner Bros. stock was up about 5.2% midday in New York. It has almost doubled since reports of deal talks with Paramount emerged in September. Play Video
The news concludes a flurry of dealmaking over the past few months that began with a series of bids by Paramount. That prompted interest from Comcast Corp. and Netflix, who were both chasing just the studios and streaming business. All three submitted sweetened bids earlier this week, with Paramount ultimately offering $30 a share for all of Warner Bros. Discovery, arguing that its proposal offered a smoother path to regulatory approval. Netflix won out in the end although significant hurdles remain before the deal can close, which the company expects it can do in the next 18 months.
Paramount could still try to raise its bid, take its offer directly to shareholders or sue to try and block the Netflix deal. The company had no comment.
California Republican Darrell Issa wrote a note to US regulators objecting to any potential Netflix deal, saying it could result in harm to consumers. Netflix has argued that one of its biggest competitors, however, is Alphabet Inc.’s YouTube, and that bundling offerings could lower prices for subscribers. Netflix accounts for between 8% and 9% of TV viewing in the US each month, according to Nielsen. It accounts for closer to 20% or 25% of streaming consumption.
Analysts at Oppenheimer said platforms such as Reels, TikTok and YouTube competing for viewers’ time should help the deal pass antitrust review.
It was 15 years ago that Time Warner CEO Jeff Bewkes, who oversaw Warner Bros. and HBO, shrugged off the threat posed by Netflix, comparing the then fledgling company to the Albanian Army. As Netflix began to invest in original programming, Sarandos declared that Netflix wanted to become HBO before HBO figured out streaming.
Sarandos succeeded and Netflix led the streaming takeover of Hollywood while HBO struggled to respond to the rise of on demand viewing and the decline of cable. Bewkes agreed to sell Time Warner to AT&T in 2016, the beginning of a decade of turmoil for HBO and Warner Bros., storied brands that are about to have their fourth owner in a decade.
Warner Bros. put itself up for sale in October after receiving three acquisition offers from Paramount, which were rejected, opening the door for Netflix and Comcast. Peters said he didn’t see the logic of these big transactions at Bloomberg’s Screentime conference in October, but Sarandos privately pushed for the deal.
The bidding got contentious, with Paramount accusing Warner Bros. of operating an unfair process that favored Netflix. The Netflix offer topped Paramount’s when combining the money for the studio and streaming business with the estimated value of the networks. The two sides agreed to the deal Thursday night.
Under terms of the agreement, Warner Bros. shareholders will receive $23.25 in cash and $4.50 in Netflix common stock. Moelis & Co. is Netflix’s financial adviser. Wells Fargo is acting as an additional financial advisor and, along with BNP Paribas and HSBC Holdings, is providing $59 billion in debt financing, according to a regulatory filing, one of the largest ever loans of its kind. Allen & Co., JPMorgan Chase & Co. and Evercore are serving as financial advisers to Warner Bros. Discovery.
Netflix agreed to pay Warner Bros. a termination fee of $5.8 billion if the deal falls apart or fails to get regulatory approval. “We’re highly confident in the regulatory process,” Sarandos said Friday.
In addition to streaming overlap, regulators will also likely look at the impact on theatrical releases, which Netflix has traditionally eschewed in favor of prioritizing content on its platform.
Netflix said it will continue to release Warner Bros. movies in theaters and produce the studio’s TV shows for third parties — two major changes in how it does business. The company was a little short on details of exactly how it will integrate the different businesses, but Netflix said it expects to maintain Warner Bros.’ current operations and build on its strengths.
The deal will allow Netflix to “significantly expand” US production capacity and invest in original content, which will create jobs and strengthen the entertainment industry, the company said. The combination is also expected to create “at least $2 billion to $3 billion” in cost savings per year by the third year.
Warner Bros. Discovery CEO David Zaslav was the architect of combining Warner Bros. and Discovery in 2022, a deal he hoped would create a viable competitor to Netflix. But the company’s share price tanked in response to a series of public miscues and the continued decline of the cable network business.
While performance rebounded a bit over the last year, the company never quite became the streaming dynamo Zaslav envisioned. He’ll continue to run the company through its spinoff and sale. The two companies haven’t yet agreed on him having any role at Netflix.
The traditional TV business is in the midst of a major contraction as viewers shift to streaming, the world that Netflix dominates. In the most recent quarter, Warner Bros. cable TV networks division reported a 23% decline in revenue, as customers canceled their subscriptions and advertisers moved elsewhere.
In 2021, Mark Zuckerberg recast Facebook as Meta and declared the metaverse — a digital realm where people would work, socialize, and spend much of their lives — the company’s next great frontier. He framed it as the “successor to the mobile internet” and said Meta would be “metaverse-first.”
The hype wasn’t all him. Grayscale, the investment firm specializing in crypto, called the Metaverse a “trillion-dollar revenue opportunity.” Barbados even opened up an embassy in Decentraland, one of the worlds in the metaverse.
Five years later, that bet has become one of the most expensive misadventures in tech. Meta’s Reality Labs division has racked up more than $70 billion in losses since 2021, according to Bloomberg, burning through cash on blocky virtual environments, glitchy avatars, expensive headsets, and a user base of approximately 38 people as of 2022.
For many people, the problem is that the value proposition is unclear; the metaverse simply doesn’t yet deliver a must-have reason to ditch their phone or laptop. Despite years of investment, VR remains burdened by serious structural limitations, and for most users there’s simply not enough compelling content beyond niche gaming.
A 30% budget cut
Zuckerberg is now preparing to slash Reality Labs’ budget by as much as 30%, Bloomberg said. The cuts—which could translate to $4 billion to $6 billion in reduced spend—would hit everything from the Horizon Worlds virtual platform to the Quest hardware unit. Layoffs could come as early as January, though final decisions haven’t been made, according to Bloomberg.
The move follows a strategy meeting last month at Zuckerberg’s Hawaii compound, where he reviewed Meta’s 2026 budget and asked executives to find 10% cuts across the board, the report said. Reality Labs was told to go deeper. Competition in the broader VR market simply never took off the way Meta expected, one person said. The result: a division long viewed as a money sink is finally being reined in.
Wall Street cheered. Meta’s stock jumped more than 4% Thursday on the news, adding roughly $69 billion in market value.
“Smart move, just late,” Craig Huber of Huber Research told Reuters. Investors have been complaining for years that the metaverse effort was an expensive distraction, one that drained resources without producing meaningful revenue.
Metaverse out, AI in
Meta didn’t immediately respond to Fortune’s request for comment, but it insists it isn’t killing the metaverse outright. A spokesperson told the South China Morning Post that the company is “shifting some investment from Metaverse toward AI glasses and wearables,” pointing to momentum behind its Ray-Ban smart glasses, which Zuckerberg says have tripled in sales over the past year.
But there’s no avoiding the reality: AI is the new obsession, and the new money pit.
Meta expects to spend around $72 billion on AI this year, nearly matching everything it has lost on the metaverse since 2021. That includes massive outlays for data centers, model development, and new hardware. Investors are much more excited about AI burn than metaverse burn, but even they want clarity on how much Meta will ultimately be spending — and for how long.
Across tech, companies are evaluating anything that isn’t directly tied to AI. Apple is revamping its leadership structure, partially around AI concerns. Microsoft is rethinking the “economics of AI.” Amazon, Google, and Microsoft are pouring billions into cloud infrastructure to keep up with demand. Signs point to money-losing initiatives without a clear AI angle being on the chopping block, with Meta as a dramatic example.
On the company’s most recent earnings call, executives didn’t use the word “metaverse” once.
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