Sen. Tim Scott Urges Rigorous Antitrust Review of Netflix’s Proposed Acquisition of Warner Bros. Discovery

WASHINGTON - U.S. Senator Tim Scott (R-S.C.) sent a letter to Department of Justice Assistant Attorney General for the Antitrust Division Gail Slater and Federal Trade Commission Chairman Andrew Ferguson urging a rigorous antitrust review of Netflix's proposed acquisition of Warner Bros. Discovery.

In the letter, Sen. Scott wrote: "I write to express serious concerns about Netflix's agreement to buy the streaming and studio assets of its competitor Warner Bros. Discovery. Such a transaction raises the prospect of significant antitrust problems in streaming and for the movie industry more broadly. The transaction warrants rigorous antitrust review under all applicable antitrust merger and monopolization laws and, to the extent appropriate, a lawsuit to block it.

"In streaming, Netflix is already dominant, and its proposed acquisition of a key competitor (HBO) may be a pathway to increase prices for everyday Americans, reduce choice, and obtain or entrench monopoly power. Netflix currently outpaces all rivals in subscribers, viewing time, and monthly visits, and seems to have the power to increase prices regularly."

Read the full letter here or below:

Dear Assistant Attorney General Slater and Chairman Ferguson,

I write to express serious concerns about Netflix's agreement to buy the streaming and studio assets of its competitor Warner Bros. Discovery. Such a transaction raises the prospect of significant antitrust problems in streaming and for the movie industry more broadly. The transaction warrants rigorous antitrust review under all applicable antitrust merger and monopolization laws and, to the extent appropriate, a lawsuit to block it.

In streaming, Netflix is already dominant, and its proposed acquisition of a key competitor (HBO) may be a pathway to increase prices for everyday Americans, reduce choice, and obtain or entrench monopoly power. Netflix currently outpaces all rivals in subscribers, viewing time, and monthly visits, and seems to have the power to increase prices regularly.

In addition to the apparent harms to paid streaming customers, this transaction also could raise serious concerns for a host of constituencies-moviegoers, on-camera talent, writers, producers, and everyone who loves the entertainment industry. For example, Netflix's acquisition of a major studio eventually may lead to Warner Bros. films being solely available on Netflix, which could create a crisis for brick-and-mortar movie theatres. Also, there are real questions about how the transaction and its resulting power will negatively impact content creators, who will have fewer options for the talents and one less path to the big screen.

Finally, it deserves serious consideration whether the very act of entering into the agreement to buy Warner Bros. Discovery-in and of itself-constitutes a form of monopolization under the antitrust laws. The proposed acquisition is so facially problematic that one must ask whether Netflix entered into the agreement knowing that the deal would likely be blocked, but it nonetheless did so with the expectation that the costs and other burdens of a years-long antitrust fight would cause Warner Bros. Discovery to wither on the vine into a severely weakened competitor. Any evidence that a dominant player like Netflix even considered that the merger review process might benefit itself by hobbling a competitor would be deeply concerning and could render the act of entering into the agreement itself potentially unlawful.

I am aware that key voices in the industry share these concerns, such as (i) a Hollywood group that wrote a letter to Congress, saying the deal would "hold a noose around the theatrical marketplace";[1] (ii) the Writers Guild of America saying the deal "must be blocked" because "the world's largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent";[2] (iii) Michael O'Leary from Cinema United, who called it "an unprecedented threat" because "theaters will close, communities will suffer, jobs will be lost";[3] (iv) Lindsay Dougherty, Head of Teamsters' Motion Picture Division, who said that Netflix "consolidating its power over the streaming video market not only kills jobs but also raises prices and hurts the U.S. entertainment industry";[4] and (v) The International Documentary Association, which said the deal "immediately threatens documentarians' creative opportunities and their freedom to tell stories that need to be told."[5]

Therefore, given the level of concern and the potential for harm to competition, I urge you to carefully evaluate the proposed deal involving Netflix and Warner Bros. Discovery and to act decisively to prevent anticompetitive conduct in this vital sector.

Sincerely,

/X/

###