The Trump administration’s impending review of the potential merger between Warner Bros. Discovery and Paramount is poised to reshape the media landscape. The evaluation will draw upon standards established in the Clayton Antitrust Act of 1914, which aims to prevent anti-competitive mergers. The administration is preparing for a monumental test. Questions are starting to surface about the legal challenges it might face and what that means for the future of important players in the streaming world.
Former President Donald Trump, a vocal critic of major news organizations such as CNN, has indicated that he would directly involve himself in the decision-making process related to the merger. That’s a huge departure from normal presidential practice. Typically, political leaders recuse themselves from antitrust reviews to avoid even the appearance of bias. Trump’s involvement is a pretty obvious indicator of intent. His administration is clearly willing to crack down on anticompetitive mergers that would markedly decrease competition in media-related industries.
Market dynamics complicate matters further. Nowhere is this more evident than the current streaming wars, where Netflix controls 46% of mobile app monthly active users worldwide. Trump’s concerns about a potential Netflix acquisition highlight the administration’s intent to carefully evaluate market share impacts. He warned, for instance, that such a deal “would be a huge blow.” He acknowledged the considerable market power a combined company would possess.
Potential new antitrust lawsuits would be an unwelcome surprise to the Trump administration. Legal experts wonder how they’d prove that kind of anti-competitive behavior in court. As legal scholar Stucke observed, “A speeding violation or murder is pretty straightforward. But showing harm in a merger challenge is considerably less cut and dried, allowing more leeway for subjectivity and disagreement.
The Trump administration holds most of the cards in these negotiations. It would force important concessions from streaming giants such as Netflix and Paramount. If a settlement does not become feasible, the administration can then sue to prevent the merger entirely. The review process could drag on from months to well more than a year, sowing confusion throughout the industry in the meantime.
Public-interest advocates and industry experts have expressed conflicting opinions on the merger’s impact. David Ellison articulated a vision for the combined entity, stating, “What we’re creating by putting these two companies together is a real competitor to Netflix, a real competitor to Amazon, a real competitor to Disney.” Such sentiments highlight the need for innovation and competition in an ever-consolidating media market.
The review will take into account its burdens on upstream content distributors like movie theatres. Weinstein pointed out that the administration could negotiate an alternative consent decree. This decree may have non-competitive stipulations to ameliorate antitrust issues, letting the merger pass without a total prohibition. “It’s entirely possible you might have a consent decree with conditions that are non-competitive,” Weinstein stated.
As those discussions widen and deepen, a new spanner is thrown in — via Paramount’s hostile bid for Warner Bros. Discovery. By appealing directly to shareholders, Paramount hopes to avoid management resistance and force the creation of new, more favorable competitive dynamics. Allensworth commented, “At this moment, you can approach either Warner or Paramount as competitive studios. This will take away one of those options.”
That’s a lot of power, and an equally high stakes game for all parties involved. If approved, the merger will have a profound impact on how we create, publish and share content. This change would impact potentially hundreds of millions of viewers worldwide. These possible outcomes require close examination by regulators whose mission is to protect competitive markets.
In terms of government oversight, Netflix co-CEO Ted Sarandos was positive about getting approval for the merger deal. He framed it as beneficial for consumers and creators alike: “This deal is pro-consumer, pro-innovation, pro-worker, it’s pro-creator, it’s pro-growth.” These kinds of statements are meant to portray Netflix as a principled player in the ongoing debates over media consolidation.
Regulatory agencies are already reviewing the merger proposal. They need to balance concerns about market dominance with potential positive outcomes for consumers and the innovation of industry as a whole. As continual advancements shape the landscape, we must thoughtfully consider each and every variable at work.
