Trump Warns Netflix-Warner Deal May Pose Antitrust ‘Problem’ (4)

US President Donald Trump raised potential antitrust concerns around Netflix Inc.’s planned $72 billion acquisition of Warner Bros. Discovery Inc., noting that the market share of the combined entity may pose problems.

Trump’s comments, made as he arrived at the Kennedy Center for an event on Sunday, may spur concerns regulators will oppose the coupling of the world’s dominant streaming service with a Hollywood icon. The company faces a lengthy Justice Department review of a deal that would reshape the entertainment industry.

“Well, that’s got to go through a process, and we’ll see what happens,” Trump said when asked about the deal, confirming he met Netflix co-Chief Executive Officer Ted Sarandos recently. “But it is a big market share. It could be a problem.”

Bets on prediction marketplace Polymarket showed a 23% chance of Netflix closing the acquisition by the end of 2026, down from around 60% just before Trump’s comments. Warner Bros. shares were down less than 1% to $25.86 on Monday morning in premarket trading in New York. That’s less than Netflix’s offer of $27.75 a share. Warner Bros. will spin off its cable networks division into a separate company before concluding the sale of its Hollywood studios business and HBO to Netflix.

Sarandos said on a call with investors on Friday that he’s “highly confident in the regulatory process,” contending the deal favors consumers, workers and innovation. That confidence is more than just talk, as Netflix also agreed to pay $5.8 billion to Warner Bros. if the deal falls apart or fails to win regulatory approval, one of the biggest breakup fees of all time.

The transaction would combine the world’s No. 1 streaming player with HBO Max, another top platform. The Justice Department’s antitrust division, which would review the transaction in the US, could argue that the deal would give Netflix too much control over the streaming market, with a combined 30%.

Netflix has “a very big market share, and when they have Warner Brothers, you know, that share goes up a lot,” the president said, adding that he will be personally involved in the decision-making process.

Netflix is expected to argue that other services such as Alphabet Inc.’s YouTube and ByteDance Ltd.’s TikTok should be included in any analysis of the market, which would dramatically shrink the platform’s perceived market dominance. Even if antitrust reviews just focus on streaming, Netflix believes it will ultimately prevail, pointing to Amazon.com Inc.’s Prime and Walt Disney Co. as other major competitors, according to people familiar with the company’s thinking.

Sarandos met with Trump at the White House recently to lobby for the acquisition, Bloomberg reported earlier. Netflix wasn’t any kind of all-powerful monopoly, the executive argued at that time, and had suffered its own subscriber losses a couple of years earlier, according to people familiar with the matter.

Kevin Hassett, who is seen as the leading contender to become the next chairman of the Federal Reserve, said it’s not “rare for presidents to have opinions about big, society-changing mergers.” But in the end, the Justice Department will look at the concentration in the streaming business and the amount of competition that is reduced as a result of the merger.

“I think the president is just very interested in making sure that there’s a lot of analysis to make sure that we make the right choice,” Hassett said, speaking on CNBC.

By choosing Netflix, Warner Bros. jilted Paramount Skydance Corp., a move that risks touching off a political battle in Washington. Paramount is backed by the world’s second-richest man, Larry Ellison, and has touted longstanding ties to Trump. The acquisition of Paramount, which closed in August, has won public praise from the president.

Paramount, too, would face a host of regulatory concerns despite the Ellison’s friendly relations with the Trump administration. Combining Paramount with Warner Bros. would consolidate two major Hollywood studios, two streaming networks and the influential news outlets of CBS News and CNN. Netflix doesn’t have broadcast networks or cable channels.

Read more: Warner Bros.’ Suitors All Bring Regulatory Baggage to Auction

US lawmakers from both parties, including Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren, have already faulted the Netflix transaction — which would create a global streaming giant with nearly 450 million users — as harmful to consumers.

European Union regulators are also likely to subject the Netflix proposal to an intensive review. In the UK, the deal drew scrutiny even before the announcement, with House of Lords member Baroness Luciana Berger pressing the government on how the transaction would impact competition and consumer prices.

Netflix is expected to argue that more than 75% of HBO Max subscribers already subscribe to Netflix, making them complementary offerings rather than competitors, said people familiar with the matter, who asked not to be named discussing confidential deliberations. The company is expected to make the case that reducing its content costs through owning Warner Bros., eliminating redundant back-end technology and bundling Netflix with Max will yield lower prices.

Some analysts think Netflix can prevail.

“I don’t think it really creates a monopolistic situation,” Wall Street veteran Ed Yardeni, of Yardeni Research, told Bloomberg Television. “Technology monopolies don’t last very long because somebody figures out how to compete against them, and there are certainly plenty of other streaming services.”

(Updates with shares in fourth paragraph and earlier comments on regulatory process.)

--With assistance from María Paula Mijares Torres, Mark Anderson, Vlad Savov, Suvashree Ghosh, Abhishek Vishnoi and Linus Chua.

To contact the reporters on this story:
Hadriana Lowenkron in Washington at hlowenkron@bloomberg.net;
Se Young Lee in Washington at vlee294@bloomberg.net

To contact the editors responsible for this story:
Kevin Whitelaw at kwhitelaw@bloomberg.net

Wendy Benjaminson, Molly Schuetz

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