Netflix is making a play for Warner Bros. Discovery, aiming to acquire its Hollywood studio and streaming service. However, this potential deal is encountering increasing pushback from the Trump administration, according to On the Money.
As reported recently, White House officials who have direct access to President Trump discussed their concerns about the deal around ten days ago. They feel that the acquisition could give Netflix undue market power.
Additionally, the Justice Department’s antitrust division, under the leadership of Director Gale Slater, is also expressing skepticism. They’ve been holding discussions regarding Warner Bros. Discovery’s situation, which further complicates Netflix’s bid.
Sources mention that if Netflix wins in its quest for HBO Max and Warner Bros. Studios, it could trigger a long-term, extensive investigation by the Justice Department’s antitrust team.
A former government official provided insight, stating, “Netflix is running all over Washington trying to convince everyone that their deal is acceptable from an antitrust perspective.” It’s noted that many in both the White House and the Justice Department remain unconvinced by Netflix’s arguments.
The crux of the issue is HBO Max, which is currently the third-largest streaming service, boasting 100 million subscribers. When paired with Netflix’s 300 million subscribers, it would significantly overshadow competitors like Disney.
There’s significant concern that a Netflix victory could lead to unfair pricing practices in the streaming market, particularly through the integration of Warner Bros. studios with Netflix’s existing assets.
Antitrust officials have compared Netflix’s acquisition attempt to Ticketmaster’s controversial control over popular venues. A former Justice Department member articulated the concern clearly: “Imagine Ticketmaster controlling the venues every artist wants to play at and their potential to dictate pricing.”
This situation, they argue, would compel everyone in Hollywood to adhere to Netflix’s terms, granting them significant pricing leverage over consumers as well.
Netflix has not responded to multiple requests for comments, nor has the Justice Department provided immediate feedback.
Warner Bros. Discovery is currently in its second round of bidding. Alongside Netflix, Paramount Skydance is also vying for the company, while Comcast is contemplating acquiring Warner’s streaming service and studio.
Antitrust experts worry that Netflix may have an edge in this bidding contest due to the rapport between WBD CEO David Zaslav and Netflix co-CEO Ted Sarandos.
A decision on the winning bid could happen as soon as this week, but WBD might opt for a third round of auctioning to achieve a higher bid for its assets, which include significant cable properties like CNN and HBO. Although declining an offer is an option, it could potentially hurt WBD’s stock value.
Netflix and Paramount Skydance, led by David Ellison and his father Larry Ellison, are viewed as strong contenders. Netflix is proposing a cash-heavy offer for WBD’s studios and HBO Max, while the Ellisons are prepared to purchase the whole company for over $25 per share.
Insiders speculate that WBD could be valued between $60 billion and $70 billion, more than double its worth before the auction process began, while Comcast’s cash-and-stock offer appears less enticing to shareholders.
