Decades ago, home entertainment consisted of three television channels. Then came cable TV, the videocassette recorder, and the internet. Today, we are in another entertainment revolution, as people are cutting the cord on cable TV and turning to dozens of streaming services for their entertainment.
And now, Warner Bros. Discovery (WBD) is seeking buyers for its entertainment portfolio. As the Wall Street Journal reported Nov. 20, first-round indications of interest were due soon. Paramount, Comcast, and Netflix have already submitted nonbinding bids, and WBD apparently hopes to finish the process before the end of the year.
The Antitrust Angle
Any deal of this size is going to land on the desk of the U.S. Justice Department (DOJ) Antitrust Division or the Federal Trade Commission (FTC) for a careful review. That’s exactly as it should be. But the way those agencies conduct the review matters a great deal.
U.S. antitrust law has relied on the consumer-welfare standard for more than four decades, and this approach should continue. The relevant question is not whether a transaction makes a company bigger or reduces the raw number of players. Rather, it is whether it would lead to higher prices, lower quality, less innovation, or genuine foreclosure of rivals—and whether any of that harm would be offset by efficiencies that reach consumers.
Various entertainment media are fighting for consumers’ attention. Sports leagues like Major League Baseball and the National Basketball Association offer their own streaming services. College sports are shown on ESPN+ and various cable networks. Niche audiences such as foreign-film fans can watch BritBox, anime enthusiasts can view Crunchyroll, and gaming fans can play on Steam. The battle for your focus is fierce, and the limits on any single studio or streaming platform are broader and more demanding than ever.
This broader competitive reality is why some mergers that would have been blocked 20 years ago are now rightly cleared. Think Disney/Fox or WBD itself. In both cases, regulators ultimately concluded that scale was necessary to compete with the tech giants who were pouring non-entertainment cash into Hollywood.
That reality must inform how we think about consolidation. The fixed costs of making tentpole movies and prestige television keep climbing, while piracy, short-form video, and global competition keep pressure on margins. In a world where many companies can subsidize content with cash flows from other lines of business, U.S. studios sometimes need greater scale simply to remain in the game.
With that said, some of the bidders cited by Wall Street Journal do raise interesting antitrust questions.
Possible Comcast Acquisition
For example, Comcast already owns both pipes and programming—NBCUniversal studios, plus a tremendous broadband and cable footprint. If Comcast bought WBD, antitrust enforcers would ask whether it would make economic sense for the combined company to withhold HBO, the DC Universe franchise, or Discovery content from rival distributors.
Even if content were not withheld, enforcers would want to know if Comcast would raise content prices sufficiently to rival distributors to undermine competition. Under this scenario, consumers would be harmed because Comcast and the other distributors would charge final consumers more than previously.
Those are significant questions, but they are also highly fact-specific and require a close analysis of real-world market dynamics. Such an analysis would include (among other things) the likely reactions of third-party distributors, purveyors of other content, and ultimate consumers to a price rise.
Possible Netflix Acquisition
Netflix does not control last-mile broadband or traditional pay-tv bundles. A Netflix/WBD deal would instead combine the leading subscription streaming service with one of the deepest content libraries in the business.
But that doesn’t mean there are no potential antitrust concerns. Could exclusive control over Harry Potter, Game of Thrones, the DC Universe franchise, and more raise switching costs or starve smaller services of must-have titles? This concern is legitimate, but it must be tested against hard evidence.
Antitrust – The Big Picture
Evidence-driven analysis should apply to every potential buyer, whether it’s an established studio still struggling to reach streaming scale or a financial sponsor. The consumer-welfare standard doesn’t pick winners; it simply asks whether a given transaction would harm consumers or generate efficiencies that ultimately help them.
If the WBD auction moves forward, the DOJ and FTC will have to define relevant markets carefully, acknowledge the competitive pressure coming from global tech platforms, and internalize the efficiencies that often arise when large content portfolios are managed under one roof.
Most of all, they will have to remember that the purpose of antitrust is to protect competition and consumers, not to preserve a comforting but obsolete industry structure that no longer serves the public.
