Netflix $NFLX ( ▼ 2.89% ) may have won the bidding war for Warner Bros. Discovery $WBD ( ▲ 6.28% ) , but clearing the regulatory finish line is looking a lot tougher. The streamer agreed to an $83 billion deal that would merge the largest and fourth-largest streaming services, and Netflix could owe a $5.8 billion cash breakup fee if the deal is blocked on antitrust grounds.
Netflix has argued that the merger will not meaningfully increase market share because most subscribers already have both Netflix and HBO Max. It also claims the deal would lower consumer costs through new bundles and that no company can monopolize “content” in the internet era. Those claims are now facing intense pushback from nearly every corner of the entertainment ecosystem.
Paramount Skydance $PSKY ( ▼ 9.82% ) , which lost the bidding war, has accused WBD’s board of running a flawed and biased process. Theater owners are also blasting the tie-up, warning that Netflix’s distribution strategy could cut the US box office by as much as 25 percent if major films skip theaters. Shares of AMC $AMC ( ▼ 2.58% ) and Cinemark $CNK ( ▼ 8.01% ) are slumping on those concerns.
Labor unions are entering the fray as well. The Writers Guild of America said any consolidation among major studios would be a “disaster” for workers, and a group of anonymous film producers told Congress the merger would let Netflix strangle the theatrical market. Lawmakers in both parties have voiced skepticism, with comments ranging from competition worries to outright calling the deal an “anti-monopoly nightmare.”
Netflix maintains that Warner Bros. films will continue to receive theatrical releases through 2029, but critics remain unconvinced. Whether the company can overcome the political and industry backlash is an open question, and failure could leave Netflix with a multibillion-dollar bill.