Film Groups Ask State Attorneys General to Challenge Netflix’s Bid for Warner Bros.

The letter, dated Jan. 22 and backed by groups such as the International Documentary Association, the American Economic Liberties Project and Art House Convergence, contends that combining Netflix with Warner Bros. and HBO would merge the world’s most valuable entertainment platform with one of the industry’s historic studios and a competing streaming service. That scale, the signatories say, would tighten Netflix’s grip on the market and make it harder for smaller players to survive, according to Bloomberg.

Concerns about the deal are not limited to advocacy groups. A range of Hollywood figures has publicly suggested that Warner Bros. would be healthier as a stand-alone company, while lawmakers from both parties have also raised red flags. Senators Mike Lee of Utah and Elizabeth Warren of Massachusetts are among those who have questioned whether the merger would undermine competition. In Washington, the Senate Judiciary Committee plans to hold a Feb. 3 hearing focused on the streaming business, and politicians in the United Kingdom have likewise called for a regulatory review, per Bloomberg.

Netflix, for its part, has said it expects to clear regulatory hurdles and maintains that the deal would not be anti-competitive. The company notes that it represents less than a tenth of total U.S. television viewing and does not own a traditional film and TV studio. Critics counter that Netflix controls a much larger share of the paid streaming market, giving it outsized leverage over pricing and content distribution, according to Bloomberg.

Read more: UK Politicians Urge Competition Watchdog to Probe Netflix Bid for Warner Bros Discovery

The American Economic Liberties Project has taken its appeal to state attorneys general in part because of uncertainty about how the Trump administration might respond. President Donald Trump has at times praised Netflix while also voicing doubts about the acquisition. During Trump’s first term, the Justice Department challenged several large mergers, including AT&T’s takeover of Time Warner, which then owned Warner Bros. and HBO. The current administration is viewed by some observers as more permissive toward consolidation, making state-level enforcement more important, per Bloomberg.

State attorneys general have a history of stepping in when federal regulators do not. They intervened in Hewlett Packard Enterprise’s bid for Juniper Networks and previously attempted to block T-Mobile US from buying Sprint, illustrating their willingness to challenge deals they see as harmful to competition, according to Bloomberg.

Opposition to the Netflix-Warner Bros. transaction is also part of a broader pushback against consolidation across the media sector. The same groups have criticized Paramount Skydance Corp.’s pursuit of Warner Bros. Discovery and earlier interest from Comcast Corp. A Paramount-Warner Bros. tie-up would echo Disney’s acquisition of Fox’s studio assets, which was followed by a decline in theatrical film output, per Bloomberg.

Warner Bros.’ board initially planned to spin off its studio and streaming operations from its cable networks, but shifted course after drawing strong interest from multiple suitors, including Paramount. Netflix’s offer would value Warner Bros. at more than double its market worth before takeover talks became public, highlighting how coveted its film and television library has become, according to Bloomberg.

Source: Bloomberg