HEATH NEWMAN—The reported Netflix-Warner Bros. merger has drawn criticism from industry observers who warn that the deal could accelerate the decline of traditional cinema. On December 5, 2025, Netflix announced that it acquired Warner Bros. for a total enterprise value of $82.7 billion, which made for something less than happy holidays for Hollywood. Along with the immense, legendary catalog owned by Warner, including franchises like Batman, Harry Potter, and The Lord of the Rings, Netflix would also take control of HBO Max, a streaming service with about 130 million subscribers worldwide. Netflix, meanwhile, boasts over 300 million users, making it the largest streaming service in the world. In sum, the combination of two industry titans raises serious questions about how this consolidation will affect competition, consumers, and the future structure of the entertainment market.
These concerns place the proposed merger squarely within the framework of federal merger enforcement under U.S. antitrust law. Section 7 of the Clayton Act, the second of the United States’ major antitrust statutes, bans acquisitions and mergers when the effect “may be substantially to lessen competition, or to tend to create a monopoly.” The starting point for evaluating mergers under the Clayton Act is to properly define the relevant market. Despite some disagreement over precise market boundaries, the prevailing view defines the relevant market as Subscription Video on Demand (“SVOD”). SVOD is a streaming model where viewers pay a recurring monthly or annual fee to access a library of TV shows, movies, and other premium content on demand, which includes companies such as Netflix, Amazon Prime Video, Hulu, Disney+, Paramount+, Peacock, HBO Max, and Apple TV.
With the relevant market established, applying the Department of Justice’s (“DOJ”) 2023 Merger Guidelines reveals that the transaction would likely give rise to a structural presumption of anticompetitive harm. Based on standard concentration measures, the merger would increase the Herfindahl–Hirschman Index by approximately 432 points—well above the 200-point threshold that triggers heightened concern in already concentrated markets. Consequently, the merger between Netflix and Warner risks creating a level of concentration that modern antitrust doctrine treats as presumptively problematic, with the combined firm controlling an estimated 30–40% of the SVOD market.
The effects of the merger could be costly, with some market analysts predicting that it could put an end to the so-called “streaming wars.” That outcome offers little benefit to consumers, who generally gain from increased content, innovation, and lower prices when companies are forced to compete for viewers. Now, however, Netflix is in the position to continually raise its prices by reducing meaningful competition, leaving consumers with fewer viable alternatives. In addition to harming consumers, the merger could also injure film and television producers by reducing the number of competing bidders for their content. When a show like Game of Thrones is being pitched, we expect direct rivals like Netflix and HBO to compete fiercely for it. Accordingly, eliminating one of the two “is pretty much the textbook antitrust definition of lost competition.”
In addition to the anticompetitive horizontal effects, the merger likewise raises vertical integration concerns. Warner Bros.’ catalog contains some of the most sought-after franchises in entertainment—titles that reliably drive subscriber growth and theatrical audiences. Netflix, by contrast, operates primarily as a distributor, relying on a mix of original programming and licensed content delivered directly through its platform. Regulators will therefore need to assess whether Netflix’s ownership of Warner’s existing library and future studio output would create incentives to foreclose rival distributors by withholding content, delaying release windows, or raising licensing prices. Such foreclosure could reduce the amount of content available to consumers and narrow the avenues through which it can be accessed. And to the extent rivals face higher licensing costs, those increases are likely to be passed on to consumers in the form of higher prices or reduced offerings.
To counter antitrust concerns, Netflix co-CEOs Greg Peters and Ted Sarandos have stated that the deal is “pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth.” Peters and Sarandos likewise cited Nielsen data reportedly showing that combining Netflix and Warner would result in a smaller viewership share than YouTube currently holds, or what a competing Paramount-Warner merger would create. According to Peters and Sarandos, after combining with Warner, Netflix’s viewership share would only move from 8% to 9% in the U.S., which is still well behind YouTube (13%) and a potential Paramount-Warner combination (14%). But these claims have drawn skepticism from lawmakers. Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal submitted a letter to the DOJ expressing concern that the merger would create a media company with enhanced market power and an increased ability to raise television costs for consumers. The senators warned that consolidation of this scale could exacerbate pricing pressures at a time when many households are already facing rising costs, underscoring broader concerns about the merger’s direct impact on consumers rather than relative viewership metrics alone.
Of course, it will be some time before regulators determine whether the Netflix-Warner transaction can proceed. But the deal squarely implicates the core concerns of modern merger enforcement, including heightened concentration in already concentrated markets, the loss of direct competition, and the risks associated with vertical integration between content and distribution. Whether approved or challenged, the merger will serve as a meaningful test of how rigorously antitrust law is applied to consolidation in the streaming era, and of whether competition, rather than sheer scale, continues to guide the future of the entertainment industry. Until then, the fate of Hollywood, and the structure of modern media itself, hangs in the balance.
