Regulatory Hurdles and Antitrust Concerns Cloud Netflix-Warner Bros. Discovery Merger

The proposed $82.7 billion merger between Netflix and Warner Bros. Discovery faces significant regulatory challenges amid concerns about market concentration, price increases, and labor effects.

Herbert Hovenkamp, an antitrust law professor at the University of Pennsylvania, expressed skepticism about the deal, noting that existing Department of Justice (DOJ) antitrust guidelines from 2010 might not support a legal challenge. However, Hovenkamp highlighted uncertainties around whether the Trump administration would enforce the Biden-era antitrust rules. Republican senators like Josh Hawley and Mike Lee have voiced worries about potential global antitrust scrutiny stemming from the merger.

Netflix is advancing its defense by emphasizing the strength of its algorithm and deep understanding of viewer preferences, suggesting the deal could enhance efficiency and gain regulatory approval. Nonetheless, antitrust experts such as Doha Mekki warn that regulators will carefully examine whether Netflix's increased power over creators and consumers could stifle competition.

The merger also raises concerns about Hollywood's labor market. The shift toward streaming has already reduced exclusivity windows for films and resulted in job losses among industry workers. Unions oppose the merger, fearing further contraction of opportunities, despite Netflix’s assurances of expanding creator possibilities. Historically, the DOJ has scrutinized mergers for their impact on workers, not only consumers.

Additionally, Paramount, once considered a potential Warner Bros. acquirer, may argue it poses fewer regulatory challenges than Netflix. As regulators assess market and creative sector impacts, the fate of the merger remains uncertain.