U.S. Senator Tim Scott (R-S.C.) has called for a thorough antitrust review of Netflix’s proposed acquisition of Warner Bros. Discovery. In a letter addressed to Department of Justice Assistant Attorney General for the Antitrust Division Gail Slater and Federal Trade Commission Chairman Andrew Ferguson, Scott expressed concerns about the impact such a merger could have on competition in the streaming and movie industries.
Scott wrote, “I write to express serious concerns about Netflix’s agreement to buy the streaming and studio assets of its competitor Warner Bros. Discovery. Such a transaction raises the prospect of significant antitrust problems in streaming and for the movie industry more broadly. The transaction warrants rigorous antitrust review under all applicable antitrust merger and monopolization laws and, to the extent appropriate, a lawsuit to block it.
“In streaming, Netflix is already dominant, and its proposed acquisition of a key competitor (HBO) may be a pathway to increase prices for everyday Americans, reduce choice, and obtain or entrench monopoly power. Netflix currently outpaces all rivals in subscribers, viewing time, and monthly visits, and seems to have the power to increase prices regularly.”
The letter outlines potential negative effects not only for consumers but also for other groups within the entertainment sector such as filmmakers, writers, producers, actors, and theater operators. Scott raised concerns that if Warner Bros. films become exclusive to Netflix following an acquisition, this could negatively affect traditional movie theaters by limiting access to major releases.
Scott further questioned whether entering into such an agreement could itself be considered monopolistic behavior under current antitrust laws: “Finally, it deserves serious consideration whether the very act of entering into the agreement to buy Warner Bros. Discovery—in and of itself—constitutes a form of monopolization under the antitrust laws.” He suggested that if Netflix anticipated regulatory challenges but proceeded anyway with hopes that protracted legal proceedings would weaken Warner Bros. Discovery as a competitor, this would be especially troubling.
He cited opposition from several industry groups including statements from Hollywood organizations warning that “the deal would ‘hold a noose around the theatrical marketplace’,” from the Writers Guild of America saying “the deal ‘must be blocked’ because ‘the world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent’,” Michael O’Leary from Cinema United who called it “an unprecedented threat” predicting theater closures and job losses; Lindsay Dougherty from Teamsters’ Motion Picture Division expressing concern over consolidation harming jobs and raising prices; as well as The International Documentary Association highlighting risks for documentary creators.
Scott concluded his letter urging regulators “to carefully evaluate the proposed deal involving Netflix and Warner Bros. Discovery and to act decisively to prevent anticompetitive conduct in this vital sector.”
