Source: Fortune.com
Summary
The US Justice Department’s investigation of Netflix’s proposed $72 billion takeover of Warner Bros. Discovery includes scrutiny of Netflix’s behavior and whether it wields anticompetitive leverage over creators in negotiations for acquiring programming. The department is seeking to determine whether the deal may substantially lessen competition or tend to create a monopoly. The investigation is also looking into Netflix’s ability to leverage its market power in negotiations with independent content creators.
Our Reading
The numbers tell one story.
Netflix is spending about $20 billion on programming this year, and its acquisition of Warner Bros. would give it one of the largest studios and a major competitor in streaming. The Justice Department’s investigation is a strong indication that it will take many more months before the government decides whether to challenge the Netflix-Warner Bros. deal in court.
The strategy enters a familiar phase: Netflix’s market power is being scrutinized, and the company is trying to downplay its dominance. “Netflix operates in an extremely competitive market,” said Netflix Chief Legal Officer David Hyman. But the Justice Department’s investigation suggests that the company’s behavior is being closely watched. One thing is clear: the deal’s fate is far from certain.
Author: Evan Null
