Hollywood studios should cut Netflix out of strike negotiations, Barry Diller says

Barry Diller is calling on the legacy Hollywood studios to end the dual writers and actors strikes, otherwise it'll be "catastrophic" to the industry.

The media mogul, speaking on the podcast "On with Kara Swisher," said the strikes would only strengthen streaming giant Netflix during a tumultuous time for legacy media.

"The strike does one thing, and one thing only, it strengthens Netflix and weakens the others," said Diller, the chairman of IAC and Expedia, who once held top roles at Fox, Paramount and ABC Entertainment.

He also advised studios to cut Netflix and other streamers out of the negoations with the unions.

"They should certainly get out of the room with their deepest, fiercest and almost conclusive enemy, Netflix, and probably Apple and Amazon," he said, noting their different business models. He said the legacy studios, actors and writers should be "natural allies" given their century of working together.

The remarks echo comments Diller made earlier this summer on CBS' "Face the Nation," in which he said the strikes could cause a domino effect that could produce "an absolute collapse of an entire industry."

Writers Guild of America members have been striking for more than 100 days, while the actors' union joined the picket lines in July, halting production of TV shows and movies.

In recent weeks, the Alliance of Motion Picture and Television Producers has gone public with its latest contract proposal to the writers. It was quickly apparent talks between the studios and writers remain heated.

"There was a very recent attempt to get it on track with the WGA, which I gather collapsed in the last couple of days," Diller said on Swisher's podcast, which was recorded in late August. He added it "looks bleak" that the strike could end by September.

Representatives for SAG, WGA, AMPTP and Netflix didn't immediately respond to a request for comment.

Recent discussions with the writers union included a sit down with top media brass including Disney CEO Bob Iger, NBCUniversal film head Donna Langley, Netflix co-CEO Ted Sarandos and Warner Bros. Discovery CEO David Zaslav.

In recent earnings calls, Netflix and its media peers have said they hoped to come to a resolution quickly with the writers and actors.

Diller said for the "old majors" like Disney, Comcast's NBCUniversal and Paramount Global, if the strikes last through the end of the year the lack of fresh content by the spring or summer of 2024 on their streaming services will lead to subscriber cancellations and revenue losses.

"When they have to gear up to make more programming to get back subscribers, they won't have the revenue base to be able to produce," Diller told Swisher. "So that is kinda catastrophic."

He goes on to call Netflix "an evil genius" that was able to dominate and leave legacy media scrambling to notch profits on their streaming businesses.

While making streaming a profitable business has been an ongoing focus for media companies, Diller said these companies should shift back to focusing on their broadcast and pay-TV networks. While cord-cutting of traditional pay-TV bundles continues to accelerate, the business still remains profitable.

Diller said legacy media should take some of its "shows and creativity and build our networks back up. It's there for the take."

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers.