House lawmakers Wednesday questioned the proposed tie-up between Warner Bros. and
Both Netflix and rival Paramount Skydance Corp. are making competing bids for Warner Bros. and lobbying the Trump administration. Warner Bros. is one of the world’s biggest entertainment studios and producer of well-known franchises including Harry Potter, DC Comics titles, and “The Matrix” film series.
During a subcommittee hearing, Rep. Lance Gooden (R-Texas) said subscription prices have gone up significantly while most streaming services haven’t been profitable. Netflix, however, has become profitable.
“What impact would preventing a merger between Netflix and Warner Bros. or Paramount, or any other company have on the market or any of these businesses?” Gooden asked. “And will we ensure competition or will it lead to a situation where companies will end up running out of business like Blockbuster?”
Rep. Darrell Issa (R-Calif.) made similar comments: “The reality is that the price and the cost of receiving a streaming service on an adjusted basis led by Netflix has gone up but not down.”
Warner Bros. on Wednesday said it rejected Paramount’s latest offer as inadequate, intending to stick with the Netflix deal.
A combined Netflix-Warner Bros. entity would have more than 30% of all streaming for paid content. The deal, valued at $82.7 billion, would combine Netflix’s streaming service with Warner Bros.’ film and TV studios, HBO Max and HBO.
Rep. Jerry Nadler (D-N.Y.) said the movie theater industry and the Writers Guild of America have expressed “great alarm” about the deal. Serious concerns have been raised about whether this deal reduces competition, diminishes consumer choice, and leads to fewer jobs for content creators, he said.
“If Netflix must get bigger in order to compete, that is a sign of a market that is already highly out of balance,” he said.
The comments came during a House Judiciary Subcommittee hearing in Washington on competition and consumer choice in digital streaming. Nadler is the ranking Democrat on the subcommittee.
A key question in the deal is the definition of a relevant market, a threshold issue in antitrust law, said Jessica Melugin, director of the Center for Technology & Innovation at the Competitive Enterprise Institute and a witness at the hearing.
“Government efforts to block mergers will likely attempt to establish the narrowest possible definition of the relevant market, mainly subscription video-on-demand exclusively, but does that provide an accurate reflection of how consumers view possible substitutions? Do broadcast, cable and satellite channels still provide ample competitive pressure to restrain prices?”
Melugin also noted that social media is a competitive pressure, citing
Trump Factor
Rep. Jamie Raskin (D-Md.) expressed concern about appropriate antitrust review and Trump’s involvement.
“The President seems to want Paramount and Netflix to compete for his approval of a deal—both companies are already lobbying the White House right now,” he said. “To state the obvious, President Trump is not an antitrust expert, nor is he committed to antitrust law.”
Raskin also noted that Trump has long been critical of CNN, the news organization owned by Warner Bros. “Does anyone doubt that one way to entice the president’s favor is to promise him more direct control over CNN?” he said.
Former Department of Justice antitrust official Roger Alford has been vocal about the pervasive practice of lobbyists trying to influence antitrust law enforcement at the agency, Raskin noted.
Alford, who served in Republican administrations and was fired from the DOJ, decried the influence of lobbyists in a settlement that allowed the $14 billion merger between
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