The announcement that streaming giant Netflix has agreed to acquire Warner Bros. Discovery (WBD), including its film and television studios, HBO Max and HBO in a mega $83 billion deal, has led to a backlash among Hollywood unions and political figures, while also raising concerns over the future of the movie industry.
The deal, which would place HBO brands under the Netflix umbrella and hand control of the historic Warner Bros. studio to Netflix, has alarmed the sector, signaling a major shift and giving the streaming giant an edge in the market if it's finalized.
In announcing the deal, Warner Bros. and Netflix executives touted the deal's benefits. Warner Bros. Discovery CEO David Zaslav said the deal "will ensure people everywhere will continue to enjoy the world's most resonant stories for generations to come," while Netflix co-CEO Ted Sarandos said it would "give audiences more of what they love."
However, film and television industry entities, including guilds and the lobbying group for movie theater owners, criticized the deal, warning it would harm consumers and cinema owners.
In the press release on Friday, Netflix said that the "acquisition brings together two pioneering entertainment businesses, combining Netflix’s innovation, global reach and best-in-class streaming service with Warner Bros.’ century-long legacy of world-class storytelling."
It added that "beloved franchises, shows and movies such as ‘The Big Bang Theory,’ ‘The Sopranos,’ ‘Game of Thrones,’ ‘The Wizard of Oz’ and the ‘DC Universe’ will join Netflix’s extensive portfolio."
Some members of Congress deemed the proposed acquisition an antitrust "nightmare" for consumers and creatives.
Republicans in Congress have warned of potential antitrust issues arising from Netflix's acquisition of HBO Max and Warner Bros.' content rights. Some Democrats, including Senator Elizabeth Warren, also criticized the transaction.
Warren said the deal "would create one massive media giant with control of close to half of the streaming market – threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk."
Both Warren and U.S. Representative Pramila Jayapal, who co-chairs the House Monopoly Busters Caucus, called the deal a "nightmare."
"It would mean more price hikes, ads, & cookie-cutter content, less creative control for artists and lower pay for workers," she said in a post on social media site X.
Senator Amy Klobuchar, a Democrat from Minnesota, said the "proposed deal, and any other, should be closely scrutinized."
Critics also said a Netflix-Warner combo would be bad news for moviegoers and theater workers.
Cinema United – a trade association that represents more than 30,000 movie screens in the U.S. and another 26,000 screens internationally – was quick to oppose the deal, which it said "poses an unprecedented threat to the global exhibition business."
"Netflix's stated business model does not support theatrical exhibition. In fact, it is the opposite," Michael O'Leary, CEO of Cinema United, said Friday. "Theaters will close, communities will suffer, jobs will be lost."
The Writers Guild of America sounded a similar alarm and called for the merger to be blocked.
While Netflix won the bidding war for Warner Bros. studio and streaming assets, it has been the political underdog compared with David Ellison-led Paramount Skydance, which has close ties with the Trump administration.
Paramount is considering making an alternative takeover offer directly to Warner Bros shareholders, who have yet to vote on the Netflix deal, CNBC reported on Friday. Reuters could not verify the report.
As the process played out, Republicans in Congress warned that a Netflix acquisition would reduce choice for consumers and give Netflix an unacceptably high share of the streaming market.
On Wednesday, U.S. Senator Mike Lee, a Utah Republican who leads the antitrust committee, said a Netflix buy of Warner Bros Discovery's streaming assets "should send alarm to antitrust enforcers around the world."
"Netflix built a great service, but increasing Netflix’s dominance this way would mean the end of the Golden Age of streaming for content creators and consumers," Lee wrote in a post on X.
Last month, Republican Senator Roger Marshall of Kansas and Representative Darrell Issa of California also called on U.S. antitrust enforcers to scrutinize any possible Netflix-Warner Bros. deal, saying it could lead to fewer movies in theaters.
The deal, given its size alone, is likely to face significant antitrust review by the U.S. Department of Justice (DOJ), and also because it would eliminate competition between HBO Max, which has 128 million subscribers, and Netflix.
Netflix could counter by pointing to shifting media habits and the fact that Alphabet's YouTube has recently been the most popular way for Americans to watch TV.
"We're highly confident in the regulatory process. This deal is pro-consumer, pro-innovation, pro-worker, it's pro-creator, it's pro-growth," Sarandos said after the deal was announced.
A DOJ spokesperson declined to comment on Friday.
George Hay, a law professor at Cornell University, said the review will depend on how much of the content market Netflix would control after the deal and whether that could be addressed through a partial sale of assets.
"Warner Bros has a lot of content already in the can. So you can imagine spinning off some of that content to another supplier, maybe a Paramount or something like that, as a way of ameliorating or diminishing the market share," he said.
The deal would also likely trigger intense antitrust scrutiny in the European Union due to the combined companies' market share.
UNIC, the EU trade body representing cinema trade associations and operators covering 39 territories, said it will share its concerns and opposition to the deal with competition authorities.
The antitrust unit at DOJ is led by Gail Slater, a former executive at Fox Corp and Roku. She later served as an economic advisor to Vice President JD Vance.
Last month, Slater signaled that the "main thing" for her office is focusing on the average American's biggest expenditures. Housing, transportation, food, healthcare and utilities lead the list, with entertainment in fifth place at 5% of household spending, according to a pie chart Slater posted on X.
But those entertainment costs have been rising. Netflix raised the price of its own standard ad-free plan by $2.50 to $17.99 a month in January. HBO Max followed suit, raising the price of its ad-free service last month by $1.50 to $18.49.
U.S. President Donald Trump, meanwhile, also has a history of getting involved in big media mergers and weighing in on one side.
He actively lobbied the DOJ in his first term to halt AT&T's $85 billion purchase of Time-Warner, voicing concerns about media concentration and his own displeasure with Time-Warner's CNN cable network. AT&T ultimately won in court in 2018 and 2019.
Warren warned on Friday that political favoritism could taint the deal's review process.
"The Justice Department must enforce our nation’s anti-monopoly laws fairly and transparently – not use the Warner Bros. deal review to invite influence-peddling and bribery," she said.
The transaction valued Warner Bros. Discovery at $27.75 per share, implying a total equity value of approximately $72.0 billion and an enterprise value of approximately $82.7 billion, the companies said on Friday.
It comes after Warner Bros. Discovery announced in June plans to separate its Streaming & Studios and Global Networks divisions into two separate publicly traded companies by next year.
"This separation is now expected to be completed in Q3 2026, prior to the closing of this transaction," they said.
