US Antitrust Officials Scrutinize Netflix’s $83bn Warner Bros Discovery Bid

Officials at the US Department of Justice are examining whether the streaming giant’s takeover of Warner Bros Discovery’s studio and streaming operations could raise competition concerns, according to the Financial Times. Regulators have contacted industry participants to assess whether Netflix could gain excessive market power through the transaction, per the Financial Times.

The review is said to involve both Section 2 of the Sherman Act, which addresses illegal monopolisation, and Section 7 of the Clayton Act, which prohibits deals that could substantially reduce competition, according to the Financial Times. While enforcement under Section 2 has historically been rare, authorities have shown renewed interest in applying it in recent years, per the Financial Times. The justice department declined to comment publicly on the matter. Such reviews do not automatically result in enforcement action.

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Netflix said it “is not aware of any investigation into our business outside of the standard merger review process,” and added that it is “constructively engaging” with the DoJ in its review of the proposed deal. A spokesperson for Warner Bros Discovery expressed confidence in the outcome, stating: “We have the utmost confidence the Netflix transaction will satisfy all regulatory conditions.”

The regulatory scrutiny comes as Paramount continues to pursue Warner Bros Discovery with a competing offer. Although Netflix has so far led the bidding, Paramount — supported by Oracle billionaire Larry Ellison — has launched a hostile approach and recently signalled it could seek to replace Warner Bros Discovery’s board through a proxy fight, according to the Financial Times.

Related: Netflix Adds Antitrust Veteran to Lobbying Team Amid Scrutiny of Warner Bros. Discovery Deal

Netflix has accused its rival of distorting the nature of the regulatory review. “We expect them to continue focusing on optics over outcomes,” the company said. Steven Sunshine, a lawyer representing Netflix, added that the company “has not been given any notice or seen any other sign that the DoJ is conducting a separate monopolisation investigation”.

The proposed merger has also drawn attention from lawmakers. This week, Netflix co-chief executive Ted Sarandos appeared before a Senate panel to defend the transaction. During the hearing, Cory Booker, a Democratic senator from New Jersey, said he was concerned about Netflix “getting more power over consumers and leaving fewer alternatives and streaming platforms”.

Paramount chief executive David Ellison was invited to attend the same hearing but declined. The justice department is also reviewing Paramount’s own proposal to acquire Warner Bros, though Warner Bros Discovery’s board has repeatedly rejected its bids, according to the Financial Times.

Political figures have weighed in as well. President Donald Trump previously remarked that Netflix already holds a “very big market share and when they have Warner Brothers that share goes up a lot,” adding that “it could be a problem”. However, in a recent interview with NBC, he said: “I’ve decided I shouldn’t be involved. The justice department will handle it.”