In the aftermath of Netflix’s stunning and consequential announcement that it has entered exclusive negotiations to acquire Warner Bros. Discovery, some who are opposed to the deal are looking to government regulators to step in to block it. However, antitrust experts in both the U.S. and Europe are striking a less-than-confident tone about those prospects.
In Europe, large corporate acquisitions are reviewed by the European Commission, a regulatory group within the European Union. The European Commission only rarely steps in to block acquisitions, even when they involve the combination of two large multi-national companies in the same industry. Rather, the European Commission is more likely to recommend “remedies” to address concerns presented by a merger. The details of those remedies will be crucial for exhibitors, with the hope that they require Netflix to guarantee it continues to release new movies from Warner Bros. Studios to movie theatres. There is a long-standing practice in certain EU countries to set policies that support local film production and the success of movie theatres as an industry.
Most experts agree that the U.S. Department of Justic will at least review the proposed deal. There could also be challenges by various U.S. State Attorneys General, with the possibility that several of the AGs could join in an antitrust lawsuit to block the deal. New York and California are thought of as likely partners in such a maneuver, since the entertainment industry makes up a significant portion of their economies. Netflix CEO Ted Sarandos is projecting confidence, saying to his shareholders that he expects the deal to be approval because it’s ““pro-consumer, pro-innovation, pro-worker, pro-creator and pro-growth.”
