Streaming Wars Heat Up: Why a Netflix or Paramount Takeover of Warner Bros. Discovery Could Harm Consumers
Consumers are facing a potential return to the frustrating realities of traditional television as the battle for control of Warner Bros. Discovery intensifies, threatening fair prices and content choice.
The media landscape was rocked on December 5th when Netflix (NFLX) announced a deal to acquire Warner Bros. Discovery (WBD) for $83 billion. This move could place iconic brands like HBO, “Game of Thrones,” Batman, and Harry Potter under the control of the world’s largest streaming platform. However, the story didn’t end there. Days later, Paramount Skydance (PSKY) countered with a sweetened $108 billion takeover bid directly to Warner Bros. Discovery shareholders, escalating the conflict.
This struggle for Warner Bros. Discovery represents the latest escalation in the ongoing arms race for streaming content and subscribers, following Walt Disney’s (DIS) $71 billion acquisition of 21st Century Fox in 2019. The result, according to observers, has been a fragmented and increasingly expensive experience for consumers. The average person now maintains 4.6 streaming service subscriptions, and monthly costs have risen to $69 – a 13% increase year-over-year – on top of existing internet expenses.
“Streaming companies are poised to fully replicate the predatory practices of the Hollywood studios, broadcast networks and cable monopolies that came before them,” one analyst warned. Policymakers are urged to learn from past mistakes and intervene to protect consumer choice by blocking the Netflix acquisition and potentially breaking up “Big Streaming.”
Recent actions by media giants demonstrate a willingness to leverage their content for competitive advantage. Last month, Disney blacked out Monday Night Football for YouTube TV subscribers during a fee dispute lasting weeks, simultaneously encouraging viewers to switch to its own streaming platform, ESPN+.
The current model often lures subscribers with low introductory prices, only to dramatically increase them once customers are locked into the service. Platforms, led by Netflix, have consistently raised prices. Netflix’s ad-free monthly subscription has jumped from $7.99 to $17.99 over the past 13 years. Similarly, an ad-free Disney+ subscription now costs $18.99 per month, a 172% increase from its $6.99 introductory price in 2019.
These practices are leading consumers to reconsider the very model they sought to escape – the cable bundle.
The initial promise of “cutting the cord” was one of choice and freedom from the rigid, monopolistic practices of cable conglomerates, which often cross-subsidized channels with hidden fees and restrictive contracts. However, the current landscape of online streaming platforms is beginning to mirror those very issues.
The challenges facing the streaming industry are not new in American entertainment history. Concerns about concentrated control over content have existed since the advent of “talkies” replaced silent films. Policymakers have successfully addressed similar issues in both Hollywood and broadcast television, and can apply those same solutions to the digital age to regulate the power of streaming conglomerates.
In the 1930s, major Hollywood studios controlled the entire filmmaking process – production, distribution, and exhibition – prioritizing their own content and disadvantaging competitors and moviegoers. Government intervention forced a separation of these functions, fostering a thriving independent film industry under what became known as the Paramount Decrees.
Later, as broadcast television dominated, the three major networks – ABC, CBS, and NBC – reached nearly every household in the country, financing and controlling primetime programming. To address this, the government implemented “financial interest and syndication,” or “fin-syn,” rules in the 1970s, preventing broadcasters from owning perpetual financial interests in their own content. These rules, until their repeal, spurred the growth of independent production houses and the rise of cable television.
“The streaming conglomerates are no different from the Hollywood studios or broadcast networks that came before them,” a senior official stated, “and Netflix, Disney, Paramount and Amazon.com (AMZN) can be handled in the same way.”
To restore competition, “Big Streaming” should be compelled to divest either production or exhibition assets, preventing complete vertical integration. Independent streaming platforms should then be subject to compulsory licensing requirements similar to those imposed on cable operators, allowing them to license content from any provider at a fair fee. This would eliminate the current proliferation of exclusive streaming apps designed to lock content behind proprietary walls.
Such a system would encourage platforms to compete on price and user experience, rather than relying on exclusive content libraries. Independent producers and studios would have a fairer opportunity to compete with the industry giants, resulting in more affordable prices and greater choice for consumers, as well as reducing the need for multiple streaming subscriptions.
The ultimate decision regarding this potential merger will likely rest with the courts. The Justice Department should initiate legal action to block the acquisition, and state attorneys general should follow suit. Simultaneously, Congress should legislate a separation between the production and exhibition of film and television.
Industry leaders will undoubtedly argue against government intervention, citing their investments in content and job creation. However, the era of loss-leading streaming prices and exorbitant talent paydays is coming to an end. As subscriber growth slows, “Big Streaming” is increasingly focused on maximizing revenue and curtailing spending. History demonstrates that prudent regulation can actually enhance quality; the Paramount Decrees, for example, led to a surge in independent filmmaking.
Blocking either Netflix or Paramount from acquiring Warner Bros. Discovery and revitalizing competition throughout the industry will lower prices for consumers, expand viewing options, and support the continued viability of movie theaters.
Alex Jacquez is chief of policy and advocacy at Groundwork Collaborative, a nonprofit advocacy group. He previously served as a special assistant to the president for economic development and industrial strategy at the White House National Economic Council.
More: Is Netflix’s massive $83 billion Warner Bros. Discovery deal actually a sign of weakness?
-Alex Jacquez
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