Netflix to Acquire Warner Bros: The Antitrust Nightmare

On December 5, Netflix and Warner Bros. Discovery announced that they have entered into a definitive agreement under which Netflix is to acquire Warner Bros.’ film and television studios as well as its streaming assets, HBO Max and HBO. The deal came about after a weeks-long bidding war, which had initially favoured Paramount, before Netflix ultimately secured Warner Bros. for US $82.7 billion (accounting for debt and other liabilities/assets). Skadden advised Netflix, while Warner Bros. engaged Debevoise and Wachtell.

Netflix’s co-CEO, Ted Sarandos, is expecting the deal to move forward and gain regulatory approval easily, claiming it is ‘pro-consumer, pro-innovation, pro-worker, pro-creator, [and]pro-growth.’ More specifically, the acquisition is said to create more choice for consumersand increase production capacity, which will in turn benefit the talent community and Netflix’s business outlook as it expects a $2 to 3 billion annual cost-savings by the third post-acquisition year.

Overall, this deal could increase profitability, making Netflix better positioned to invest in new productions and global expansions. Netflix will still be in competition with rivals such as Apple, Disney, Amazon, Comcast, and Paramount.

However, it does not seem likely that those proposed advantages will outweigh the substantial antitrust concerns that accompany this deal.

The Competition Question

The concern is whether, by acquiring one of its major competitors, Netflix will become a monopoly in the streaming market. When Netflix gains considerable control over content creation and distribution, it will have a ‘bargaining leverage’ over licensing and talent deals, a power that can reshape industry norms and dynamics.

While consumer choice was advertised as a selling point, the acquisition, in reality, risks reducing consumer choice, as fewer independent platforms would remain to offer differentiated content or competitive pricing; this is a consequence of foreclosure. Moreover, smaller producers could become increasingly dependent on Netflix’s terms, narrowing their negotiating power and potentially limiting the diversity of voices represented in mainstream media. In this environment, Netflix could determine not only which shows reach audiences, but also the financial and contractual conditions under which the broader industry operates.

The deal has already received scrutiny from the Trump Administration due to Netflix’s already ‘big market share’, where the post-acquisition size ‘could be a problem’.

Simply put, due to the combination of production and streaming distribution services, understood as vertical integration in competition law circles, the resultant company will be an entertainment giant, raising the question ‘Is it a monopoly or a superpower?’

Student Refocus

While this so-called ‘anti-monopoly nightmare’ is a developing matter that is yet to set its own legal precedent, this deal provides a valuable opportunity for discussion with antitrust practitioners. It allows you to examine, in real time, the implications of one of the largest deals in digital entertainment history and consider how its consequences may develop to reshape the market.