The Justice Department is investigating whether Netflix has engaged in anticompetitive practices in its probe of the streamer’s proposed tie-up with Warner Bros. Discovery, according to a report Friday.
The subpoena suggests that not only is the deal facing antitrust scrutiny, but Netflix as a whole might be reviewed for an allegedly monopolistic business model.
“Describe any other exclusionary conduct on the part of Netflix that would reasonably appear capable of entrenching market or monopoly power,” the agency asked in a civil subpoena sent to another unnamed entertainment firm, The Wall Street Journal reported Friday.
Netflix in December agreed to pay $27.75 a share in cash in a deal worth $72 billion to acquire WBD’s studio and streaming business – potentially creating a Hollywood mammoth that owns everything from “Stranger Things” to the “Harry Potter” franchise.
Paramount quickly made a $77.9 billion hostile bid for the entire company, including WBD’s cable networks like CNN, TNT and Food Network – blasting Netflix’s offer and arguing its deal provides better value.
The Department of Justice is also reviewing Paramount’s proposed deal, which Warner Bros. has urged shareholders to reject.
In the DOJ’s subpoena, the department reportedly asked whether either the Netflix or Paramount deal could hurt competition in the industry.
Officials also asked for details on how past studio mergers had impacted competition and information on how talent contracts differ across studios.
The investigation could ultimately give the DOJ a legal argument against the Warner deal if it finds evidence of monopolistic control, though it is unlikely to wrap up its investigation anytime soon.
The antitrust review process often takes as long as a year, and the deal is likely to be held up by regulators overseas, too.
Netflix lawyer Steven Sunshine said the company thinks the Justice Department is simply conducting a standard review of its proposal to acquire WBD’s assets.
“We have not been given any notice or seen any other sign that the DOJ is conducting a separate monopolization investigation,” he said.
A spokesperson for Netflix said the company is unaware of any investigation outside of the standard merger review process.
“We are constructively engaging with the Department of Justice as part of the standard review of our proposed acquisition of Warner Bros,” the spokesperson told The Post.
Concerns that Netflix might be investigated along the lines of Amazon and Google for an allegedly monopolistic business model have been weighing on the streaming giant’s stock price, which has shed more than $160 billion in market value over the past six months, The Post previously reported.
Makan Delrahim, Paramount’s chief legal officer, served as the DOJ’s antitrust chief during President Trump’s first term and led the merger investigation into a $5.3 billion Visa-Plaid deal.
In 2020, the DOJ sued to block the deal after looking at the payment company’s market control, as Visa had a 70% share of the market in online debit transactions. Visa ultimately dropped the offer.
Delrahim has argued the DOJ could use that same framework when investigating the Netflix deal. Together, Netflix and WBD’s HBO Max would control roughly 30% of the US subscription service marketplace, according to the Journal report.
Netflix has argued the statistic is meaningless because of subscriber overlap, saying 80% of HBO Max subscribers also pay for Netflix.
During an interview with NBC News earlier this week, Trump said he will not get involved in the deal.
“The Justice Department will handle it,” he said.
The DOJ, Paramount and Warner Bros. Discover did not immediately respond to The Post’s requests for comment.
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