Netflix’s $83 Billion Warner Bros. Deal Faces Scrutiny in Senate Antitrust hearing
Netflix’s proposed acquisition of Warner Bros. Discovery is under intense scrutiny from U.S. lawmakers, who voiced concerns Tuesday over the potential impact on competition, jobs, and consumer prices.netflix co-CEO Ted Sarandos defended the $83 billion deal before the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, facing pointed questions from both sides of the aisle.
The hearing, titled “Examining the Competitive Impact of the Proposed Netflix-Warner Brothers Transaction,” signals a notable challenge to the streaming giant’s ambitions. Lawmakers are grappling with whether the merger will consolidate power in the entertainment industry, perhaps stifling innovation and limiting consumer choice.
Antitrust Concerns Take Center Stage
Senator Mike Lee (R-Utah),chair of the subcommittee,opened the hearing by expressing “antitrust concerns” that warrant careful examination. He highlighted that both Netflix and HBO Max operate as subscription streaming services, while Netflix and Warner Bros. directly compete in the production of television shows and films. According to Lee, a combined Netflix-Warner bros. entity would possess “the incentive and the ability to put rivals at a disadvantage” through content licensing restrictions and could negatively impact movie theaters.
“Netflix could become the ‘one platform to rule them all,'” Lee stated, underscoring the potential for market dominance.
Senator Cory Booker (D-New Jersey), the subcommittee’s ranking member, echoed these concerns, emphasizing the potential for job losses in Hollywood. He noted that the sale of Warner Bros. “to any competitor” could reduce the volume of TV shows and films produced,impacting
offer.
Netflix recently shifted to an all-cash offer for Warner Bros. Discovery, abandoning its previous cash-and-stock arrangement, a move reportedly driven by pressure from Paramount Skydance.
The Rationale Behind the Acquisition
Lee questioned Sarandos about the necessity of acquiring Warner Bros.’ studios, given Netflix’s existing plan to invest $20 billion – a 10% increase – in original content by 2026. Sarandos responded that Warner Bros. is both a “competitor and a supplier,” and that the acquisition aligns with Netflix’s strategy of “adding more” content and choices for consumers.
The debate extended to whether YouTube constitutes genuine competition. While Lee questioned YouTube’s relevance given its lack of direct funding for original content, Sarandos argued that Netflix and YouTube are competing for the same viewers, content, and advertising revenue. he cited the success of “Iron Lung,” a self-financed film from YouTube creator Markiplier, which topped the box office over the weekend as evidence of YouTube’s growing influence.
Job Preservation and Pricing Strategies
Netflix and Warner Bros. Discovery maintain that the deal will preserve industry jobs, arguing that Netflix lacks a studio operation of the scale of Warner bros. They also pointed to Paramount Skydance’s claim that acquiring Warner Bros. Discovery could yield $6 billion in cost savings, but cautioned that this figure is predicated on substantial layoffs. netflix further asserts that streaming prices will decrease, suggesting that consumers view HBO Max as a complementary service, forcing competitors like Amazon’s Prime Video and Disney+/Hulu to maintain competitive pricing.
Bruce Campbell, WBD’s chief revenue and strategy officer, testified that the deal would provide Warner Bros.’ studios with access to Netflix’s distribution network, while bolstering Netflix’s “nascent” production operations through Warner Bros.’ studio infrastructure.
Both Netflix and Warner bros. Discovery have proactively engaged with antitrust regulators in the U.S. and Europe to advocate for the deal’s approval, with their legal teams contacting the Justice Department’s antitrust division immediately following the initial announcement on December 5. The outcome of these regulatory reviews will ultimately determine whether the streaming landscape is poised for a significant shift in power.
