The U.S. Department of Justice has opened an antitrust investigation into Netflix’s proposed acquisition of Warner Bros. Discovery, examining whether the transaction could substantially lessen competition or create a monopoly in violation of federal law.
Bloomberg and Deadline reported that the DOJ formally began reviewing the merger. Although Netflix, Warner Bros., and the DOJ have not publicly confirmed the probe, Deadline obtained a Civil Investigative Demand issued under the Antitrust Civil Process Act. The document states the investigation is intended to determine whether “the proposed acquisition of Warner Bros. Discovery, Inc. by Netflix Inc” may substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act.
The CID was sent on February 20, and sources indicate the investigation has been active for approximately three weeks. Omeed Assefi, acting head of the DOJ’s Antitrust Division, who recently replaced Abigail Slater, sent the demand within the past 48 hours to filmmakers and producers seeking documentary material, written interrogatories, and sworn responses by March 23. That deadline falls three days after a March 20 special meeting of Warner Bros. Discovery shareholders. At that meeting, shareholders will vote on CEO David Zaslav and other board members’ recommendation to accept Netflix’s offer for the studio and streaming assets.
Netflix’s bid values the transaction at $27.75 per share, or $82.7 billion (£61.2bn) in total, for Warner Bros’ studio and streaming networks, including Warner Bros, New Line Cinema, and HBO Max. The remainder of the company would be spun off as an independent business.
The DOJ’s review is unfolding during an intense contest between Netflix and Paramount for control of Warner Bros. Discovery. The WBD board has been in weeklong talks concerning a $108 billion hostile takeover bid from the David Ellison–owned company. Paramount has offered $30 per share, or $108.4 billion, for the entire company, including traditional pay-TV networks, which are widely viewed as a declining business.
Paramount previously launched a hostile bid for Warner Bros. and has argued that Netflix’s offer would not clear regulatory review in the United States or Europe. The company stated its $77.9 billion tender offer cleared the DOJ’s second-request review process and has “no statutory impediment” to closing, though it remains subject to review in the European Union and potential scrutiny from U.S. state attorneys general. Paramount has also offered to pay the $2.8 billion break-up fee Warner Bros. agreed to pay Netflix if that deal falls through. Last week, Paramount said it would “continue to advance our tender offer” and maintain its “opposition to the inferior Netflix merger.”
Warner Bros. recently gave Paramount until the end of Monday to submit a “best and final” offer ahead of next month’s shareholder vote on the Netflix transaction. On February 20, Warner Bros. committed to resume talks with Paramount after a representative suggested increasing its bid by $1 per share to $31, setting a February 23 deadline for a final offer.
Within the DOJ’s inquiry, officials are examining Netflix’s negotiations with independent movie studios and filmmakers to assess its leverage in the marketplace. Netflix currently has 325 million subscribers worldwide and a programming budget of approximately $20 billion this year. Its original series, including Wednesday and Nobody Wants This, are produced by third-party studios. HBO Max, part of the proposed acquisition, has 128 million subscribers.
Section 2 of the Sherman Act states that any person who monopolizes or attempts to monopolize trade may be deemed guilty of a felony and, upon conviction, punished by a corporate fine not exceeding $100,000,000 or, for individuals, $1,000,000, or imprisonment not exceeding 10 years, or both.
The investigation began around the time a report from a Heritage Foundation spinoff was circulated to GOP senators. On February 3, Netflix co-chief executive Ted Sarandos testified before a Senate subcommittee chaired by Senator Mike Lee (R-UT). During that hearing in Washington, D.C., Lee questioned Sarandos, and Warner Bros. Discovery Chief Revenue Officer Bruce Campbell defended the merits of the deal while facing accusations tied to DEI and culture-war issues.
As the regulatory review proceeds, Sarandos has publicly defended Netflix’s bid. Speaking to the BBC’s Today programme, he said Netflix’s takeover offer was superior to Paramount’s because it would expand the business and the industry.
“We’re buying a movie studio and a distribution entity that we don’t currently have — we’ll be adding to the market,” Sarandos said, describing the deal as focused on “growth.”
He said Paramount was “continuing to try to disrupt” Netflix’s agreement with Warner Bros. and argued that under Paramount’s ownership, “This industry would be much smaller … than it would be under Netflix.”
“Our deal is growth. We’ve been growing and growing and growing this business since we started,” he said.
Sarandos pointed to Netflix’s investment in the United Kingdom, stating the company has created 50,000 jobs and spent “$6bn in the UK on original programming” since 2020.
He contrasted that with Paramount’s plans, saying the company “has committed that they’re going to cut $6bn out of the business right away,” and would “need to cut an additional $16bn.”
“There’s five major studios left in Hollywood. If the Paramount deal were to go through, it would be four, because basically they’re taking two studios and collapsing them in to one,” he said.
When asked whether Netflix would increase its offer if Paramount raised its bid, Sarandos said he did not “want to do hypotheticals,” but described Netflix’s proposal as “a spectacular opportunity at a price.”
Sarandos also addressed comments from President Donald Trump, who said Netflix would “face the consequences” if it did not remove Democratic board member Susan Rice. Sarandos responded: “This is a business deal, it’s not a political deal. He likes to do a lot of things on social media.”
Trump met with Sarandos on November 24, shortly before the WBD board accepted Netflix’s offer. In a pre-Super Bowl interview with NBC’s Tom Llamas, Trump said he “shouldn’t be involved” in deciding who acquires WBD and CNN. He has publicly criticized Susan Rice while also maintaining ties with Larry Ellison and David Ellison.
Sarandos also responded to criticism from director James Cameron, who wrote to U.S. competition regulators that it would be “disastrous” for the cinema business if the Netflix deal proceeded. Sarandos called Cameron “disingenuous.”
“An average Netflix member watches seven movies a month. An average person in the US goes to the cinema twice a year,” he said.
He added that Netflix does not view itself as a direct competitor to cinemas, stating that when audiences watch a great film on the big screen, they often want to watch more films when they return home.
