A group of 11 Republican state attorneys general penned a letter to the Department of Justice asking for the agency to “thoroughly scrutinize” Netflix’s $83 billion deal to acquire Warner Bros. studio and streaming assets.
The group warns that the deal would give Netflix “undue market concentration that stifles competition” and create “higher prices, lower reliability, and less innovation for one of America’s major industries—all to the detriment of American consumers.”
“Consumers in our States have expressed alarm about the proposed merger. Given the stakes, we encourage the Department of Justice to subject this proposed merger to a thorough and exacting review under the Clayton Act,” the letter states. “If Netflix is permitted to consummate its acquisition of Warner Brothers, the elimination of competitors and the vertical foreclosure of content library
inputs that are crucial to competitors may lead to, among other things, a monopoly that will charge the State’s citizens higher subscription prices for less content of reduced quality.”
Additionally, the letter warns that the merger could be disastrous for movie theaters that are still recovering from the COVID-19 pandemic and the 2o23 Hollywood strikes and would threaten the United States’ dominance as “the world leader in movies.”
“We respectfully urge you to conduct a thorough review of the proposed merger,” the letter concludes. “We also offer any assistance that you may need as you consider the deal.”
The effort is being led by Nebraska Attorney General Mike Hilgers and Montana Attorney General Austin Knudsen. Other signatories on the letter include attorneys general from Alabama, Alaska, Iowa, Kansas, North Dakota, South Carolina, Tennessee, Utah and West Virginia.
“We have serious concerns with the impact of this proposed merger on Nebraskans, and will work with the DOJ and our state partners and determine the appropriate steps forward to protect Nebraskans from anti-competitive conduct,”
Hilgers said in a statement.
In addition to the group, California Attorney General Rob Bonta has called for a “full and robust review” of both the Netflix deal and Paramount’s rival bid. A spokesperson for Bonta’s office previously told TheWrap in November that “further consolidation in markets that are central to American economic life does not serve our economy, consumers, or competition well.”
In a new statement on Friday, Bonta noted that market consolidation has led to “increased unaffordability, a loss of good-paying job opportunities, and fewer choices for consumers.” He added that California’s film and entertainment industry “not only has historical importance to our state,” but is also is a “critical sector that buoys the state’s economy of California and touches the lives of Americans daily.”
The letter comes as the Department of Justice has issued a civil investigative demand (CID) to theater owners, filmmakers and producers to get their input as part of its antitrust review of the Netflix deal.
Netflix has repeatedly maintained that it has “not been given any notice or seen any other sign that the DOJ is conducting a monopolization investigation.” It also said that any claim that it is a monopolist, or seeking to monopolize, is “unfounded.”
“Our success stems from innovation and investment that benefit consumers,” Netflix chief legal officer David Hyman said. “We neither hold monopoly power nor engage in exclusionary conduct, and we’ll gladly cooperate, as we always do, with regulators on any concerns they may have.”
On Tuesday, Paramount upped its bid to $31 per share, which the WBD board said could “reasonably be expected” to lead to a “superior proposal.”
The all-cash offer includes a daily ticking fee equal to 25 cents per quarter beginning after Sept. 30, 2026. Paramount will pay a $7 billion termination fee to WBD in the event the transaction does not close due to regulatory matters. It will also cover a $2.8 billion termination fee that WBD would be required to pay to Netflix and agreed to eliminate $1.5 billion in potential financing costs associated with WBD’s debt exchange offer.
Additionally, the proposal includes an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by Paramount’s lending banks and a “material adverse affect” definition that excludes the performance of WBD’s Global Linear Networks business.
WBD’s board has not determined whether the revised Paramount bid is superior to its $83 billion deal with Netflix. It will continue to engage with Paramount to determine if it can reach a proposal that is superior.
In the event that it does, Netflix will have four business days to match Paramount’s offer and negotiate with WBD to propose any revisions to its current deal. The streamer is currently offering $27.75 per share for WBD’s studio and streaming assets, plus additional “stub equity” from the pending spinoff of Warner’s cable networks into Discovery Global.
There can be no assurance that the board will conclude that the transaction proposed by Paramount is superior to the merger with Netflix or that any definitive agreement or transaction will result from WBD’s discussions with Paramount. The Netflix deal remains in effect and the board is not withdrawing or modifying its recommendation.
In addition to its $31 per share offer, Paramount has taken a hostile takeover bid directly to shareholders after it was rejected by WBD’s board multiple times. As of Feb. 9, 42.3 million of WBD’s total 2.48 billion outstanding shares had been validly tendered to Paramount, though shareholders can withdraw their shares at any time before the offer’s deadline.
Ellison also sued Warner Bros. in January in an effort to extract more details about how the Netflix deal and Discovery Global spinoff were valued and launched a proxy fight in an attempt to sway shareholders to block the Netflix deal and require a vote to complete the Discovery Global spinoff, which is already on track for later this year. Paramount also said it planned to nominate its own director candidates to WBD’s board at the company’s annual meeting.
Shareholders are set to vote on the Netflix deal on March 20 at 8 a.m. ET. Netflix has said it expects a deal to close within 12 to 18 months, while Paramount has argued a potential deal with Warner Bros. would close within a year.
