The Justice Department is reportedly scrutinizing Netflix Inc.’s (NASDAQ:NFLX) proposed acquisition of Warner Bros. Discovery (NASDAQ:WBD) assets.
DOJ Examines Potential Anticompetitive Conduct
The U.S. Justice Department is investigating whether Netflix has engaged in anticompetitive practices as part of its proposed acquisition of Warner Bros. Discovery’s studios and HBO Max streaming service, the Wall Street Journal reported on Friday, citing a civil subpoena.
The subpoena, sent to another entertainment company, seeks information on whether Netflix has engaged in “exclusionary conduct” that could help it entrench or expand its monopoly power.
The line of questioning suggests regulators are evaluating not only the structure of the deal but also Netflix’s broader competitive behavior.
Netflix-Warner Bros. Deal Faces Heightened Scrutiny
In December, Netflix said it had agreed to acquire Warner Bros. at $27.75 per share, valuing the deal at about $72 billion in equity and roughly $82.7 billion in total enterprise value
Paramount Skydance (NASDAQ:PSKY) has since made a rival $77.9 billion hostile bid for all of Warner Bros. Discovery, prompting regulators to review both proposed deals.
Under U.S. law, regulators can block transactions that substantially reduce competition or increase the risk of monopoly power.
Netflix Pushes Back On Monopoly Concerns
Steven Sunshine, a lawyer for Netflix, said the company has not received any notice or indication that the Justice Department is conducting a separate monopolization investigation.
Market Share And Regulatory Precedent Loom Large
Estimates suggest Netflix and HBO Max together would control roughly 30% of the U.S. subscription streaming market, a threshold that can trigger heightened antitrust concern under DOJ guidelines.
However, Netflix has said the figure is misleading, noting that about 80% of HBO Max subscribers also subscribe to Netflix.
The company also argues it competes not only with paid streaming rivals but also with YouTube, a subsidiary of Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, and other free video platforms available on TV.
Meanwhile, in an interview with NBC News this week, President Donald Trump said he would not intervene in the proposed deal and that the Justice Department should handle the matter.
Price Action: Netflix shares closed up 1.64% at $82.20 on Friday and slipped slightly to $82.06 in after-hours trading, according to Benzinga Pro.
NFLX shows a weak price trend across the short, medium and long-term, with low Momentum and Value scores, according to Benzinga’s Edge Stock Rankings.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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