The Department of Justice is intensifying its scrutiny of Netflix’s proposed $72 billion acquisition of Warner Bros. Discovery, moving beyond a standard antitrust review to investigate whether the streaming giant wields undue leverage over creators. The probe, revealed in recent days, signals a potentially lengthy and complex legal battle that could reshape the future of Hollywood.
According to a copy of a civil investigative demand reviewed by Bloomberg News and sent out Friday, the DOJ is seeking to determine if the deal violates Section 7 of the Clayton Act or Section 2 of the Sherman Act – laws designed to prevent monopolies and anticompetitive practices. The demand was reportedly sent to at least one independent movie studio, indicating the DOJ is actively gathering information from industry players about Netflix’s business dealings.
The timing of the investigation is particularly significant, coming as the Warner Bros. Discovery board considers a “best and final offer” from Netflix in a hostile takeover bid. Paramount Global, backed by Skydance Media, remains a competing bidder, and the DOJ’s intervention could potentially benefit their chances by delaying the Netflix deal and opening the door for alternative proposals.
The core of the DOJ’s concern appears to be Netflix’s growing power within the entertainment industry. The investigative demand specifically asks about the potential for the acquisition to “substantially lessen competition” and “tend to create a monopoly.” This suggests the DOJ isn’t simply evaluating the merger’s impact on consumer choice, but also its potential to stifle creativity and innovation by giving Netflix excessive control over content production and distribution.
Netflix, however, maintains its innocence. Chief Legal Officer David Hyman issued a statement asserting that the company “operates in an extremely competitive market” and that claims of monopolistic behavior are “unfounded.” Hyman pledged full cooperation with regulators, but the company’s stance underscores the high stakes involved in this battle.
The proposed acquisition, initially announced in December 2025, would give Netflix control of iconic franchises like Batman and Harry Potter, as well as Warner Bros. Discovery’s film and television studios and its streaming operations, including HBO Max. The deal represents a seismic shift in Hollywood, potentially consolidating power in the hands of a streaming-first company that has historically challenged traditional theatrical release models.
This challenge to traditional models is a key point of contention for theater owners, who have long been at odds with Netflix over its reluctance to embrace wide theatrical releases. The acquisition could further accelerate the decline of movie theaters, as Netflix is likely to prioritize streaming its Warner Bros. Discovery content.
The situation has also ignited debate among filmmakers and industry figures. James Cameron, the director of *Avatar*, recently sent a scathing letter to a US antitrust lawmaker, expressing concerns about the deal and its potential impact on the industry. Cameron’s intervention highlights the deep divisions within Hollywood over the future of content distribution and the role of streaming giants.
Mark Ruffalo, another prominent actor, weighed in on the debate, seemingly siding with Cameron and questioning the implications of a Paramount acquisition as well. This suggests a broader anxiety among creatives about the concentration of power in the hands of a few large corporations.
The DOJ’s investigation is expected to take several months, potentially delaying any final decision on the Netflix-Warner Bros. Discovery deal. The agency’s acting boss, Omeed Assefi, recently replaced Abigail Slater, adding another layer of complexity to the proceedings. Recipients of the DOJ’s civil investigative demand have until , to provide documents and sworn responses.
Beyond the US, the deal is also likely to face scrutiny from European regulators. Reports suggest that EU regulators may favor Paramount over Netflix, potentially adding another hurdle to the streaming giant’s acquisition efforts.
The outcome of this battle will have far-reaching consequences for the entertainment industry. A successful acquisition by Netflix would solidify its position as a dominant force in streaming and content production, while a rejection or significant modification of the deal could open the door for Paramount or other players to emerge as major contenders. The DOJ’s investigation represents a critical moment in the ongoing evolution of Hollywood, and its findings will undoubtedly shape the future of entertainment for years to come.
