As part of its scrutiny of the proposed $72 billion acquisition of Warner Bros. Discovery by the streaming giant Netflix, the US Department of Justice (DOJ) will examine not only the transaction itself but also the company’s established market conduct, according to Bloomberg, citing a civil inquiry request sent by the department to the independent film studio.
The Ministry intends to ascertain whether this deal might “substantially lessen competition or tend to create a monopoly,” thereby violating Section 7 of the Clayton Act or Section 2 of the Sherman Act. The language used in the request suggests the administration is looking beyond a typical merger review, the article notes. Antitrust analysis usually proceeds under the Clayton Act, whereas the Sherman Act is more frequently invoked in cases involving the illegal monopolization by specific firms.
Section 7 of the Clayton Act (1914) prohibits mergers and acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly.”
Section 2 of the Sherman Act (1890) targets unlawful monopolization of the market and the abuse of a dominant position by a single company, being utilized in cases concerning the creation or attempted creation of a monopoly.
According to the news agency, the DOJ’s inquiry specifically questions Netflix’s capacity to leverage its market power when negotiating with independent studios and directors. Netflix holds the position as the world’s largest subscription video-on-demand service and is a major purchaser of film and television content, budgeting roughly $20 billion for content by 2026. Acquiring Warner Bros. would grant it oversight of one of the largest studios and a significant competitor in the streaming arena, US authorities believe.
Netflix’s Chief Legal Officer, David Hyman, assured that the company “operates in an extremely competitive environment,” does not possess monopolistic power, and is prepared to cooperate with regulators. The DOJ’s review itself is anticipated to take several months, the publication reports. Against this backdrop, a rival bidder—Paramount Skydance—persists in its pursuit of Warner Bros., asserting that a deal with Netflix would fail antitrust hurdles in both the US and Europe.
Previously, the Financial Times reported that Paramount Skydance’s $108 billion bid to acquire the studio had cleared a “key hurdle” regarding a US antitrust review. This development signals support for the deal from President Donald Trump’s administration, the publication asserted.
Should Netflix secure the film studio Warner Bros., it would gain control over the HBO Max streaming platform and the HBO channel, thereby obtaining ownership of major franchises such as “Harry Potter,” DC Comics, and “Game of Thrones.”
Certain figures within the film industry anticipate that Netflix’s purchase of Warner Bros. studio would result in detrimental consequences for the sector. For instance, James Cameron, the director of “Titanic,” “Avatar,” and “Terminator,” wrote in a letter to Republican Senator Mike Lee that the transaction would lead to substantial job losses in Hollywood, fundamentally alter the American theatrical landscape, and generally harm one of the US’s largest export sectors.
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