Netflix's $83B Warner Bid Faces Senate Antitrust Firestorm

Senate Antitrust Subcommittee Chair Mike Lee said the proposed transaction was "extraordinary in both scale and in potential consequence" and warranted close scrutiny.

He said that Netflix, the world's largest streaming platform, would gain control of Warner Bros.' film and television studios, streaming services and an extensive library of iconic content.

At a Congressional hearing on Tuesday, Lee said the merger raised horizontal antitrust concerns because Netflix and HBO Max compete directly for subscription streaming customers seeking premium films and web series.

He also warned that the companies compete for creative talent, including writers, directors and actors, and that consolidating two major employers could weaken competition in the labour market.

Lee also cited vertical risks, saying that combining Netflix's dominant global distribution platform with Warner Bros.' content portfolio could disadvantage rivals.

The Utah Republican said the merged company could withhold marquee titles, raise licensing fees or favour its own content through Netflix's recommendation algorithms, even small changes that could affect visibility and competition.

Ranking Member Cory Booker said corporate concentration had reached levels not seen for generations and warned that selling Warner Bros. to a competitor could have "serious consequences for consumers and for the television and film industry".

The New Jersey Democrat said consolidation had often led to higher subscription prices, fewer choices and shrinking opportunities for artists and creators.

Booker also raised concerns about the broader cultural impact, saying another large merger could give a single corporation greater control over "what we see, what we hear and the news we consume", while tens of thousands of workers across the entertainment industry worried about their livelihoods.

Defending the deal, Netflix co-CEO Ted Sarandos told lawmakers that a combined Netflix and Warner Bros. would "strengthen the American entertainment industry, preserve choice and value for consumers and create opportunities for creators".

He said Netflix planned to operate Warner Bros.' studios largely as they are today, keep traditional 45-day theatrical release windows for major films and continue investing in US production.

Sarandos said that the market remained highly competitive, citing broadcast networks, rival streamers and technology companies.

He said Netflix accounted for about nine per cent of US television viewing time and would rise to about 10 per cent after the merger.

He added that Netflix productions had created more than 155,000 American jobs and contributed $225 billion to the US economy.

Warner Bros. Discovery Chief Revenue and Strategy Officer, Bruce Campbell, said the company's board unanimously determined that Netflix's offer was the best option after reviewing competing bids.

He added that the vertical merger would pair Warner Bros.' studios with Netflix's streaming platform while allowing the planned separation of the company's news and sports networks into a new entity.

Several Senators pressed both executives on potential layoffs, price increases and the future of movie theaters.

Lee and others warned that the deal could divert major releases from theatres to streaming and reduce consumer choice, while Sarandos insisted the company intended to support theatrical releases and keep investing in content.

The hearing comes as the US Department of Justice and the Federal Trade Commission review the proposed merger under federal antitrust law, with lawmakers from both parties urging regulators to examine its impact on competition, prices, jobs and the future of the entertainment industry.

- IANS