Netflix is going to have to spend more time in Washington.
The streaming powerhouse announced Friday it has agreed to acquire Warner Bros., which comes with storied franchises and rival streamer HBO Max. It’s a big victory for Netflix, which outbid media giants such as Paramount, Skydance and Comcast for the property.
But the deal will mean Netflix will have to endure regulatory pressure that its competitors are likely to target as a way to kill the deal. Some top Republicans are already sounding the alarm about the acquisition and consolidation in the streaming business.
“Increasing Netflix’s dominance this way would mean the end of the Golden Age of streaming for content creators and consumers,” Sen. Mike Lee (R-Utah), who chairs the Judiciary Committee’s antitrust panel, said Wednesday ahead of the deal’s public announcement.
Rep. Darrell Issa (R-Calif.) had also warned antitrust regulators against a Netflix takeover of Warner in a November letter.
Rep. Scott Fitzgerald (R-Wis.), Lee’s counterpart on the House antitrust panel, was a bit more open to the deal.
“We should not prejudge a merger based on size alone. Evidence suggests the streaming landscape is overcrowded,” Fitzgerald said in a statement. “Consolidation can also yield substantial benefits, such as expanded content libraries and enhanced studio capabilities that could deliver better programming to audiences.”
Netflix for its part said that the two companies’ offerings are “complementary,” which is antitrust-speak for not-in-direct-competition.
The Ellison factor. A key upcoming focus will be if Paramount tries to leverage its relationships in Washington to kill the deal.
Larry Ellison, the Oracle magnate, and his son, David Ellison, are very close to President Donald Trump. Their media empire Skydance successfully acquired Paramount this year with the blessing of Trump and Federal Communications Commission Chair Brendan Carr.
Lobbying game. The Netflix-Warner deal will have to pass the muster of the Justice Department’s Antitrust Division, headed by Gail Slater.
Skadden, Arps, Slate, Meagher & Flom LLP will represent Netflix on the deal while Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP will serve as Warner’s legal counsel.
The firms could prove to be quite a formidable team. Skadden and Wachtell were behind the successful Hewlett Packard Enterprise-Juniper Networks deal.
That transaction closed this summer amid concerns the companies’ Trump-connected advisers got the Justice Department to fire Slater deputies who opposed the merger.
