As events are leaning toward David Ellison and Paramount prevailing in its $108 billion hostile-takeover bid for Warner Bros Discovery, almost a dozen Republican state attorneys general are insisting that the federal government heavily scrutinize Netflix‘s bid for the iconic studio.
“We, the undersigned Attorneys General, write to express our concerns that the proposed merger between Netflix and Warner Brothers will likely result in undue market concentration that stifles competition and therefore creates higher prices, lower reliability, and less innovation for one of America’s major industries — all to the detriment of American consumers,” wrote 11 red state AGs in a letter to U.S. Attorney General Pam Bondi.
It added, “Given the stakes, we encourage the Department of Justice to subject this proposed merger to a thorough and exacting review under the Clayton Act.”
Read the full letter, sent Tuesday, here.
This latest political shoe to drop in the battle between Netflix and Paramount for WBD comes just days after the U.S. Department of Justice began a formal antitrust probe into the streamer run by co-CEOs Ted Sarandos and Greg Peters. The letter also comes the same day Paramount CEO David Ellison was a guest of GOP lawmakers at “good friend” Donald Trump’s State of the Union address last night.
Of course, realpolitik aside, the probes into Netflix’s accepted $83 billion bid for WBD’s streaming and studio assets has again been characterized as a form of consumer protection and consumer choice.
“This massive consolidation would place an unprecedented amount of content, distribution power, and market influence into the hands of a single corporation,” Montana Attorney General Austin Knudsen said in a press release of his own regarding the letter. “History shows us what happens when industries become dominated by a few giants: prices rise, choices shrink, and innovation suffers.”
Knudsen joined AGs from Alabama, Alaska, Iowa, Kansas, Nebraska, North Dakota, South Carolina, Tennessee, Utah and West Virginia.
Paramount and Netflix both did not respond to a request for comment on the new letter. Paramount reports fourth quarter earnings after the bell later on Wednesday. Warner Bros. Discovery financials will hit early on Thursday. Both will be followed by investor calls with executives, as stakeholders dissect CEO commentary, numbers and outlook for key divisions, from linear to streaming to studios, for clues to how this M&A process could, or should, unfold.
On various red carpets and in numerous interviews and subcommittee meetings, Sarandos has insisted that the streamer does not have and will not have a monopoly with or without the WBD deal. Taking a big-digital-picture approach, the exec says the real competition for Netflix is [soon-to-be Oscar rightsholder] YouTube, not other streamers.
While Sarandos has drawn praise from Donald Trump, the president’s allies have singled out the streamer while expressing little concern over the possibility of Paramount winning Warner Bros. Discovery, something that also generates concerns in the industry over consolidation. Ellison was a guest of Sen. Lindsey Graham (R-SC), while other lawmakers have pressed Sarandos over Netflix’s content, including that featuring transgender storylines. An offshoot of the Heritage Foundation, authors of Project 2025, launched Project Netflix, designed to scuttle the deal by claiming the streamer is engaged in left wing social engineering.
Democrats also have concerns about the Netflix-WB merger as well as a Paramount transaction. California Attorney General Rob Bonta, a Democrat, last week said that his office will give a “full and robust review” to either deal.
In Washington, Democrats have directed most of their investigative threats and demands at Paramount and Ellison. Last week, a group of senators, including Minority Leader Chuck Schumer (D-CA) sent Ellison a letter urging him to preserve records, while querying him on contacts he and others have had with the administration. Ellison’s attendance at the SOTU as the guest of one of the president’s most strident supporters certainly won’t alleviate their suspicions, and are a contrast the the Paramount CEO’s insistence last year that he didn’t intend to “politicize” the company.
Jill Goldsmith contributed to this report.
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