On Tuesday, Netflix’s co-CEO Ted Sarandos faced tough questions from senators during a hearing concerning his proposed $82.7 billion acquisition of Warner Bros. Discovery, particularly focusing on its implications for competition within the entertainment sector.
Senator Mike Lee, a Republican from Utah and the head of the antitrust subcommittee, spearheaded the hearing, which featured testimonies from Sarandos and Bruce Campbell, Warner Bros.’ Chief Strategy Officer. Although the Senate cannot directly block the merger, lawmakers aimed to gather information regarding its impact on consumers, industry workers, and competitors.
Lee expressed concerns that this merger might stifle competition among streaming services and could lead to job losses for various entertainment professionals, including writers and actors. He suggested that Netflix could monopolize the market, potentially keeping films from theaters and limiting competitor access to Warner Bros.’ popular titles.
“Netflix is trying to become the one platform that rules them all,” Lee asserted.
Warner Bros. is keen on studios and franchises
Meanwhile, the Justice Department is closely examining the merger amid competing offers, including a hostile bid from Paramount Skydance.
Both Netflix and Paramount Skydance are eager to obtain Warner Bros.’ well-established film and TV studios, as well as its vast content libraries and successful franchises like “Game of Thrones,” “Harry Potter,” and DC Comics characters.
Paramount claims securing regulatory approval might be less challenging for them. However, Warner Bros. has continually turned down Paramount’s offers, opting instead to take on substantial debt to finance the Netflix deal.
David Ellison, Paramount’s CEO, is the son of billionaire Larry Ellison, co-founder of Oracle and someone who has been known to have connections with former President Trump.
During the hearing, lawmakers from both major parties expressed worry that the merger could decrease competition within the streaming marketplace.
Cory Booker, the committee’s leading Democrat, questioned Sarandos about the possible involvement of President Trump in reviewing the acquisition.
Following the announcement of the deal, Trump stated his intent to engage with the matter.
When asked if Trump was involved, Sarandos noted, “I don’t know if he’s involved or not.”
Netflix referenced data from media analytics company Nielsen, suggesting that Google’s YouTube dominates screen time on U.S. televisions compared to other streaming services. Still, experts indicate that the Justice Department is likely to scrutinize the merger in relation to specific competitive markets, especially in subscription-based streaming.
Lee probed Sarandos regarding the contrast between Netflix’s high-quality productions and the ad-supported offerings on YouTube.
Sarandos stated that the distinction in viewership on YouTube remains undisclosed publicly, emphasizing that capturing U.S. TV audiences is a “zero-sum game.”
“If you’re watching YouTube or HBO Max, you’re not watching Netflix, you’re not watching CBS,” he explained.
