Why Netflix Is Likely to Receive Regulatory Approval for Its Warner Bros. Acquisition From the Trump Administration

Netflix ( NFLX +0.41%) made a big splash recently, announcing its intent to acquire certain assets from Warner Bros. Discovery , including the company's film and television studios, as well as HBO and its associated streaming service HBO Max. Warner Bros. would retain its cable assets. The deal immediately prompted antitrust concerns, especially after President Donald Trump said the deal "could be a problem." Additionally, Paramount Skydance , which was also involved in the bidding, submitted a hostile bid after Netflix's announcement, stating it believed it is the only company that could obtain regulatory approval. Ultimately, here's why I think Netflix's proposed acquisition of certain Warner Bros. assets is likely to receive regulatory approval from the Trump administration. Netflix will argue that the streaming market has broadened When examining the streaming market in the U.S., it's fairly easy to see why there could be antitrust concerns. According to data from Statista, Netflix controlled about 21% of the U.S. streaming market at the end of 2024, 1% less than Amazon 's Prime Video. Disney + and Hulu collectively had 23% of market share (Hulu is owned by Disney). Image source: Netflix. Meanwhile, Max controlled 13% of U.S. market share. Netflix has also performed extraordinarily well this year, so it would not be surprising to see the acquisition give it more than the suggested 34% share of the U.S. streaming market that Netflix would have with HBO. However, Netflix's Co-CEOs Greg Peters and Ted Sarandos, in a recent letter to Netflix staff, argued that the streaming market is not so narrow, and actually includes the likes of Alphabet 's YouTube, which is a short- and long-form content powerhouse: Also, if you look at it through the lens of Nielsen data, even after combining with Warner Bros., our view share would only move from 8% to 9% in the U.S. -- still well behind YouTube (13%) and a potential Paramount/WBD combination (14%). We believe the facts speak for themselves, and we're fully prepared to put ourselves in a strong position for approval Now, I can certainly see why regulators might view this as a stretch, because YouTube offers such a wide variety of content, including short consumer-made videos, companies producing video podcasts, and even cable service through YouTube TV, although I'm not sure if this would be included in the Nielsen data. On the other hand, I think it's safe to say that consumer viewing habits have shifted significantly in recent years, largely due to shorter attention spans among consumers, and with platforms like YouTube and TikTok capturing more eyeballs than ever before. Netflix is also investing in video podcast content, indicating that it views it as a future part of its business. I also suspect Netflix will wade into other areas of content as it continues to grow and seek out new sources of revenue. The deal has a high chance of approval Despite skepticism, I believe there is a high likelihood that Netflix will receive regulatory approval for the acquisition ....

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