By: Addison Hichman
The proposed acquisition of Warner Bros. Discovery by Netflix crystallizes nearly every tension animating contemporary Chicago-School versus Neo-Brandisian antitrust enforcement. Announced on December 5, 2025, the $82.7 billion all-cash transaction would combine the world’s largest global streaming platform with one of the most valuable content libraries in entertainment, bringing franchises such as Harry Potter, Game of Thrones, Friends, and DC properties under a single corporate roof. The deal is expected to close in the third quarter of 2026 following shareholder approval and remains subject to review by U.S. and foreign competition authorities.
At a doctrinal level, the transaction is governed by Section 7 of the Clayton Act, which prohibits acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” Although the statutory standard is probabilistic and forward-looking, its application has traditionally been disciplined by an economics-based inquiry into likely competitive effects—higher prices, reduced output or quality, diminished innovation, or reduced consumer choice—rather than generalized skepticism toward size or integration.
Yet the political overlay surrounding the Netflix–WBD transaction underscores how merger enforcement has become increasingly intertwined with broader governance debates. Senior enforcement officials have framed aggressive antitrust enforcement as a central instrument of federal economic policy rather than a neutral application of settled law. Against this backdrop, commentators have cautioned that the fate of the deal may turn less on competitive effects than on regulators’ tolerance for further consolidation by large firms.
Horizontal Concentration and Market Definition
Horizontal merger analysis begins with market definition, typically using the hypothetical monopolist test to identify the smallest set of products or services in which a monopolist could profitably impose a small but significant non-transitory increase in price. Applied here, that framework supports a relevant product market centered on subscription video-on-demand services. Paid streaming platforms compete directly on price, exclusive content, release strategies, and platform features, and consumers primarily substitute among SVOD providers rather than between paid services and free, ad-supported alternatives.
Within that market, a Netflix–WBD combination would produce a post-merger market share of roughly one-third, crossing the threshold that the 2023 Merger Guidelines treat as indicative of heightened competitive concern. Concentration metrics reinforce that conclusion: the pre-merger market is already highly concentrated, and the transaction would generate a substantial increase in concentration sufficient to trigger a rebuttable structural presumption of illegality. On this view, the merger would raise concerns about higher subscription prices, reduced output, diminished consumer choice, and fewer production greenlights, particularly in light of the debt obligations the acquisition would impose.
At the same time, the strength of this structural inference depends critically on market definition. Excluding meaningful substitutes can inflate concentration metrics and generate presumptions divorced from competitive reality. That risk is especially salient here if regulators were to exclude platforms that consumers treat as functional alternatives when making viewing decisions. The Senate Judiciary Subcommittee hearing underscored that this definitional choice is likely to be outcome-determinative, mirroring a broader debate embedded in the 2023 Guidelines, which permit agencies to proceed on asserted competitive effects without anchoring analysis to a single market definition.
Vertical Integration and Labor-Market Effects
Beyond horizontal overlap, the transaction raises familiar vertical concerns. Netflix could limit or condition access to WBD content in ways that disadvantage rival streaming platforms, while the elimination of HBO Max as an independent distributor could reduce options for creators and independent producers. Existing licensing arrangements may mitigate these effects in the short term, but traditional Section 7 analysis focuses on post-merger incentives rather than current contractual constraints.
Labor-market effects have also featured unusually prominently in the review, reflecting the 2023 Guidelines’ explicit recognition of labor markets as an independent dimension of competitive harm. Industry unions have argued that streaming-first business models have shortened production cycles, reduced episode counts, and compressed writers’ rooms, resulting in fewer jobs and lower wages. Lawmakers echoed these concerns during the Senate hearing, framing the merger as a consolidation of labor markets as much as product markets and expressing skepticism toward efficiency claims that are difficult to verify ex ante.
Under a traditional Clayton Act framework, such labor concerns would be evaluated as part of a broader competitive effects inquiry, with particular attention to whether the transaction would meaningfully enhance monopoly power in identifiable labor markets and whether those effects could be addressed through targeted remedies.
Procompetitive Justifications and the Centrality of Market Definition
Netflix has advanced a procompetitive justification based on the integration of distinct but non-duplicative capabilities across production and distribution. The company maintains that combining Netflix’s global streaming platform, audience reach, and content delivery infrastructure with Warner Bros.’ film and television studios, theatrical distribution operations, and extensive intellectual property portfolio would increase output and improve quality rather than suppress competition. Netflix has represented that the transaction would be accompanied by increased investment in film and television production, including a $20 billion production budget for 2026, the preservation of theatrical release windows of at least forty-five days for Warner Bros. films, and the continued licensing of Warner Bros. content to rival networks and streaming services. Netflix further argues that substantial subscriber overlap between Netflix and HBO Max indicates that the services serve different consumer preferences, such that combining them would expand consumer choice through broader content offerings and bundled pricing, while enabling creators’ work to reach larger global audiences through Netflix’s international distribution network.
Whether those claims suffice to rebut structural presumptions is unlikely given the per se nature of the Neo-Brandisian antitrust regime. However, under traditional Chicago School merger review, these justifications would carry great weight, as that framework does not reject such justifications categorically, but subjects them to careful evaluation, particularly where efficiencies are difficult to measure ex ante or where competitive pressure may erode promised commitments following consolidation.
A Bellwether for Modern Antitrust
The Netflix–Warner Bros. transaction thus serves as a bellwether for modern antitrust enforcement. It combines horizontal and vertical elements, implicates labor markets, and unfolds against a backdrop of intense political scrutiny. More importantly, it highlights the growing divergence between an effects-based Clayton Act framework grounded in economic analysis and an enforcement posture that increasingly treats scale, integration, and bargaining power as presumptively suspect.
