The regulatory path ahead for a Netflix and Warner Bros. deal could get dicey

Core Viewpoint - Netflix announced a proposed $72 billion acquisition of Warner Bros. Discovery, which includes the HBO Max streaming service, aiming to consolidate its position in the streaming market [2][3]. Company Overview - Netflix currently has 300 million global subscribers, while HBO Max has 128 million subscribers as of September 30 [2]. - The merger would increase Netflix's share of mobile app monthly active users in global streaming from 46% to 56% [3]. Regulatory Environment - The deal is expected to face significant regulatory scrutiny, with skepticism from the Trump administration and calls for an antitrust review from Senator Elizabeth Warren [4][5]. - The Department of Justice (DOJ) is likely to review the merger, which could take 12 to 18 months to close, as Netflix anticipates [7][11]. Market Dynamics - Analysts express concerns that the merger could lead to higher subscription prices and fewer choices for consumers, as it would create a media giant controlling nearly half of the streaming market [5][6]. - Netflix's executives are confident that the deal is pro-consumer and will gain regulatory approval, emphasizing collaboration with governments and regulators [8][9]. Competitive Landscape - Paramount has raised concerns about the sale process favoring Netflix and has indicated that a Netflix transaction may face regulatory challenges [13][14]. - Analysts from Deutsche Bank believe that a merger involving Warner Bros. Discovery and any of the bidders could succeed despite potential DOJ opposition [12]. Industry Trends - The streaming market has seen rising subscription prices, with Netflix introducing a cheaper ad-supported model in 2022 to attract more customers [20]. - Netflix's innovative approach and successful original content have positioned it favorably in the eyes of regulators, despite the potential for increased scrutiny [21]. Audience Definition - The regulatory debate may hinge on how streaming is defined, with Netflix likely advocating for a broad definition that includes various media platforms [22]. - Critics may argue for a narrower definition to highlight Netflix's dominance in the market [23].