The proposed acquisition of Warner Bros. Discovery by Netflix is facing increasing scrutiny from both U.S. And international regulators, as well as lawmakers concerned about the potential impact on competition, pricing, and the future of the entertainment industry. The deal, valued at $83 billion in cash, has triggered a wave of debate, culminating in a Senate subcommittee hearing on .
During the hearing, Netflix co-CEO Ted Sarandos attempted to assuage concerns, characterizing the merger as largely a “vertical” one. This distinction, as explained by sources, is crucial because regulators often view vertical mergers – where companies in different stages of the supply chain combine – less harshly than horizontal mergers, which involve competitors. However, this framing is being challenged, particularly as Paramount, with Skydance, continues to pursue a competing offer for Warner Bros.
Lawmakers from both parties expressed skepticism. Senator Cory Booker (D-NJ) questioned Sarandos about a meeting with former President Donald Trump, just weeks before the deal was announced. Sarandos stated the conversation primarily revolved around broader issues facing the entertainment industry, including production incentives, tariffs, and the prevention of “runaway production” – the practice of filming outside of the United States. He emphasized that the potential transaction was a “smaller part” of the discussion, stating, “I have met with the president a few times. We have talked about the state of the entertainment industry, in general, production, the economy, runaway production, value of incentives, the cost of tariffs, all the different ways that One can protect American jobs.”
Concerns raised during the hearing, and echoed by the Department of Justice (DoJ) which is currently reviewing the deal, centered on the potential for reduced competition, increased subscription prices, and the fate of movie theaters. Sarandos attempted to address these concerns by committing to a theatrical window for Warner Bros. Films – aligning with the current industry standard – and pledging to operate the studio “largely as it is today.” He argued that the merger would ultimately benefit consumers by providing “more content for less,” pointing out that a significant percentage – 80% – of HBO Max subscribers also subscribe to Netflix.
The deal’s potential impact extends beyond the United States. The Business Post reported that UK politicians have called on the Competition and Markets Authority to launch a review into the proposed acquisition, mirroring the concerns being voiced in Washington.
The FCC Chief also expressed “competition concerns” regarding the merger, according to Bloomberg. This adds another layer of regulatory complexity to the already challenging path toward approval.
The Senate Antitrust Panel Chair has also raised concerns over the Netflix-Warner deal, according to the Wall Street Journal. The chair’s concerns add to the growing bipartisan opposition to the merger.
The DoJ ultimately holds the authority to approve or block the deal. The outcome will likely hinge on whether regulators are convinced that the merger will not substantially lessen competition in the streaming market. The competing bid from Paramount Skydance adds another dynamic to the situation, potentially offering regulators an alternative that could address some of their concerns. The debate highlights the increasing consolidation within the entertainment industry and the growing power of streaming giants like Netflix.
Sarandos, alongside Warner Bros Discovery executive Bruce Campbell, testified before the Senate Judiciary antitrust subcommittee. The hearing underscored the significant hurdles Netflix faces in securing regulatory approval for the acquisition, with lawmakers demanding assurances that the deal will not harm consumers or stifle innovation within the entertainment landscape.
