Netflix-Warner Bros deal faces political pushback even as company touts benefits

Highlights:

• Netflix says deal benefits workers, consumers and innovation
• DOJ antitrust head has listed those themes as priorities
• Republicans warn deal reduces consumer choice, increases Netflix's market share

Some members of Congress on Friday deemed Netflix's $72 billion proposed acquisition of Warner Bros Discovery's studios and streaming unit an antitrust "nightmare" for consumers and creatives, while the company touted the deal as driving value for viewers, workers and shareholders.

Netflix said the deal would create jobs and give its 300 million subscribers "more bang for their buck" by adding content at a time when President Donald Trump's administration is focused on lowering prices.

Nevertheless, Republicans in Congress have warned of potential antitrust problems with Netflix absorbing HBO Max and Warner Bros' content rights. Democrats including US Senator Elizabeth Warren also criticized the transaction.

Warren said the deal "would create one massive media giant with control of close to half of the streaming market — threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk."

Both Warren and US Representative Pramila Jayapal, who co-chairs the House Monopoly Busters Caucus, called the deal a "nightmare."

"It would mean more price hikes, ads, & cookie cutter content, less creative control for artists, and lower pay for workers," she said in a post on social media site X.

Senator Amy Klobuchar, a Democrat from Minnesota, said the "proposed deal, and any other, should be closely scrutinized."

Republican pushback

While Netflix won the bidding war for Warner Bros studio and streaming assets, it has been the political underdog compared with David Ellison-led Paramount Skydance, which has close ties with the Trump administration.

Paramount is considering making an alternative takeover offer directly to Warner Bros shareholders, who have yet to vote on the Netflix deal, CNBC reported on Friday. Reuters could not verify the report.

As the process played out, Republicans in Congress warned that a Netflix acquisition would reduce choice for consumers and give Netflix an unacceptably high share of the streaming market.

On Wednesday, US Senator Mike Lee, a Utah Republican who leads the antitrust committee, said a Netflix buy of Warner Bros Discovery's streaming assets "should send alarm to antitrust enforcers around the world."

"Netflix built a great service, but increasing Netflix's dominance this way would mean the end of the Golden Age of streaming for content creators and consumers," Lee wrote in a post on X.

Last month, Republican Senator Roger Marshall of Kansas and Representative Darrell Issa of California also called on US antitrust enforcers to scrutinize any possible Netflix–Warner Bros deal, saying it could lead to fewer movies in theaters.

Antitrust scrutiny

The deal, given its size alone, is likely to face significant antitrust review by the US Department of Justice, and also because it would eliminate competition between HBO Max, which has 128 million subscribers, and Netflix.

Netflix could counter by pointing to shifting media habits and the fact that Alphabet's YouTube has recently been the most popular way for Americans to watch TV.

"We're highly confident in the regulatory process. This deal is pro-consumer, pro-innovation, pro-worker, it's pro-creator, it's pro-growth," Netflix Co-CEO Ted Sarandos said after the deal was announced.

A DOJ spokesperson declined to comment on Friday.

George Hay, a law professor at Cornell University, said the review will depend on how much of the content market Netflix would control after the deal, and whether or not it could be addressed by a partial sale of some assets.

"Warner Bros has a lot of content already in the can. So you can imagine spinning off some of that content to another supplier, maybe a Paramount or something like that as a way of ameliorating or diminishing the market share," he said.

The deal will likely trigger intense antitrust scrutiny in the European Union due to the combined companies' market share. UNIC, the EU trade body representing cinema trade associations and operators covering 39 territories, said it will share its concerns and opposition to the deal with competition authorities.

Rising costs

The DOJ antitrust unit is led by Gail Slater, a former executive at Fox Corp and Roku. She was later an economic advisor to Vice President JD Vance.

Last month, Slater signaled that the "main thing" for her office is focusing on the average American's biggest expenditures. Housing, transportation, food, healthcare and utilities lead the list, with entertainment in fifth place at 5% of household spending, according to a pie chart Slater posted on X.

But those entertainment costs have been rising. Netflix raised the price of its own standard ad-free plan by $2.50 to $17.99 a month in January. HBO Max followed suit, raising its ad-free service price last month by $1.50 to $18.49.

Trump has a history of getting involved in big media mergers and weighing in on one side. He actively lobbied the DOJ in his first term to stop AT&T's $85 billion purchase of Time-Warner, voicing concerns about media concentration and his own displeasure with Time-Warner's CNN cable network. AT&T ultimately won in court in 2018 and 2019.

Warren warned on Friday against political favoritism tainting the deal review process.

"The Justice Department must enforce our nation's anti-monopoly laws fairly and transparently — not use the Warner Bros. deal review to invite influence-peddling and bribery," she said.