DOJ Probes Netflix’s Power Over Filmmakers in Warner Deal Review
(Bloomberg) — Justice Department says Netflix Inc.’s Warner Bros. Its investigation into its $72 billion takeover bid of Discovery Inc. includes examining the streaming giant’s conduct and whether it wielded anticompetitive influence over creators in program acquisition negotiations.
The department is seeking to determine whether the deal “may significantly lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act,” according to a copy of a civil investigative request obtained by Bloomberg News against an independent movie studio on Friday, sent to people familiar with the matter.
The language in the request, a previously unreported administrative subpoena, is the clearest sign that the Trump administration has gone beyond a standard deal review in investigating the merger, refuting Netflix’s assertion in recent weeks that the government was not engaged in anything beyond the typical process.
The broad scope of the review also points to the government’s Netflix-Warner Bros. a strong indication that it will be many more months before he decides whether to challenge his deal in court; It’s a delay that could benefit rival bidder Paramount Skydance Corp.
“Netflix operates in a highly competitive market. Any allegation that it is or is seeking to become a monopolist is unfounded,” Netflix Chief Legal Officer David Hyman said in a statement. “We neither have monopoly power nor engage in exclusionary behavior and will happily cooperate with regulators on their concerns, as we always do.”
Enforcement of both laws is precedent, and the investigation may not result in any federal action. However, deal investigations are typically conducted by U.S. antitrust enforcers using the Clayton Act, which is intended only for merger investigations. The Sherman Act, more like Alphabet Inc.’s Google, Live Nation Entertainment Inc. and Visa Inc. It is a law used to target the illegal monopolization of a single company, such as
The DOJ is raising questions about Netflix’s ability to use its market power in discussions with independent creators such as movie studios and filmmakers, sources said. Netflix operates the world’s largest paid video streaming service and is one of the largest buyers of movies and TV programming in the world.
Netflix is spending nearly $20 billion on programming this year, split between original series and licensed reruns. Many of its most popular original shows, including Wednesday and Nobody Wants This, are produced by third-party studios. By purchasing HBO and Warner Bros., Netflix will acquire both one of the largest studios and a major rival in the streaming field.
The Wall Street Journal first reported that the DOJ’s review included Netflix’s business practices and whether the deal would give the streaming giant monopoly power in the future.
“We have not been notified or seen any other indication that the DOJ is conducting an antitrust investigation,” Steve Sunshine, chairman of the global antitrust/competition group at Skadden, Arps, Slate, Meagher & Flom LLP, which represents Netflix, said in a statement.
The Justice Department did not immediately respond to a request for comment outside normal business hours. Warner Bros. He declined to comment.
Monopoly situations may require more than 50% market concentration; This figure is Netflix’s Warner Bros. Whether or not it exceeds its share. Netflix accounts for about 9% of U.S. TV viewing and a larger share of the streaming market, and its spending on programming is comparable to peers like Disney and Comcast.
Warner Bros. Earlier this week, it pledged to continue talks with Paramount after a representative of the company indicated it was willing to raise its offer price by $1 per share to $31. Warner Bros. gave Paramount until February 23 to submit its “best and last” offer.
Last year, Warner Bros. Paramount, which launched a hostile bid for Netflix, has repeatedly claimed that Netflix’s bid would never pass regulatory review in the United States or Europe. Paramount also claimed Friday that it had “no legal impediment” to closing the $77.9 billion tender offer after the bid cleared the Justice Department’s second solicitation review process.
But the proposal could still be slowed by an ongoing review in the EU, and U.S. enforcers have filed lawsuits in the past to block deals they initially approved. Paramount could also face a beating from U.S. state attorneys general.
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