Khaberni - The U.S. Department of Justice has decided to open the most comprehensive investigations in the history of major mergers and acquisitions, aiming essentially to completely reengineer the film, television, and digital broadcasting industry.
The investigations are not concerned with huge financial figures but are primarily linked to the proposed deal announced by Netflix to acquire Warner Bros. Discovery with an astronomical value of $82.7 billion, which entered a direct conflict with a competing offer presented by Paramount through its "Skydance" arm, creating a sharp polarization in the global market.
According to an investigation by The Wall Street Journal, the Justice Department's legal move went beyond the usual procedural steps to include the issuance of a civil subpoena demanding major entertainment companies provide detailed information about any exclusionary behavior that Netflix might have practiced recently.
Trying to Understand
The department is earnestly trying to understand whether this merger will lead to enhanced monopolistic market power, granting a single entity the ability to control subscription prices and the quality of content available to millions worldwide.
The matter did not stop there, but the subpoena requested a comprehensive assessment of whether any of the competing bids would harm free competition, with precise inquiries about the impact of previous deals between studios and distributors on the ability of creators such as actors, writers, and directors to obtain fair contracts, indicating that regulatory bodies have begun to consider the human and creative dimension as an inherent part of the economic monopoly equation.
The escalating controversy around Warner Bros. reflects a broader conflict over what might be described as "strategic content". In an industry that is fundamentally based on owning vast libraries and powerful franchises capable of attracting and retaining viewers, Warner Bros. Discovery stands out as a major deal that is hard to replace.
The company includes one of the richest creative libraries in industry history, featuring iconic works like the television saga "Game of Thrones" and the "Harry Potter" series which has deeply impacted successive generations, alongside a vast archive of famous "DC Comics" characters, including Batman and Superman.
Controlling these assets represents direct influence in shaping global popular culture, making them an enticing target for Netflix looking to enhance its transition from a streaming platform to a global powerhouse based on content ownership, as well as for other companies striving to secure their positions in a highly competitive market that leaves little room for smaller entities.
On an official level, Netflix has tried to downplay the significance of these developments, as their official spokesperson stated in remarks to Reuters that the company is fully cooperating with the relevant authorities, considering it a routine review that usually accompanies merger and acquisition deals.
Despite assurances from the company’s lawyer, Steven Sunshine, that they had not received any official notice of a separate monopoly investigation, the reality on the ground suggests quite the opposite.
Reservations in Europe
The reserved statements did not hide the fact that this deal is under intense scrutiny not only in the United States but also in Europe. More than a dozen politicians and former officials have moved to demand the British Competition Authority to open a full review, warning that such a shift in market power will inevitably lead to a reduction in competition and possibly a decline in the quality of locally produced content in favor of uniform global standards.
The momentum moved to the heart of the U.S. legislative institution, where the Senate held a heated hearing session that put the deal in direct spotlight. Co-CEO of Netflix, Ted Sarandos, faced sharp and decisive questions about the profound impacts of the potential acquisition on the structure of the entertainment sector.
The political scrutiny in this session was exceptional, where questions not only concerned the pure business aspects but also extended to include concerns about the formation of "digital feudalisms" that control public taste and monopolize creative talents. This shift in lawmakers' perspective reflects a growing awareness that merger deals in the era of streaming are no longer just commercial issues, but are concerns related to freedom of expression and cultural diversity in society.
Hollywood has witnessed seismic mergers in recent years that have radically affected the distribution of resources. Among these operations was Disney's acquisition of "20th Century Fox", which provided it with a huge library that quickly made the "Disney+" platform a formidable force.
As streaming platforms grow, exclusive original content has become the only hard currency capable of maintaining subscription rates. With this shift, an existential question arises about whether the world is moving towards a market controlled by only a few giant companies, which could stifle innovation and turn cinematic art into mere products produced according to profit and loss algorithms.
The Department of Justice investigations went beyond financial asset evaluation, notably focusing on how previous mergers affected competition in attracting talent. This approach reflects an awareness that the real power in Hollywood lies in the ability to employ creative minds.
If one entity becomes the largest employer of actors and writers, it will inevitably lead to decreased wages and imposition of harsh contractual terms, and signs of this are already appearing in the restrictions of exclusive contracts. The current movement by the Justice Department comes at a critical time as the industry seeks to reorganize itself in the post-broadcasting era, and the outcomes of these investigations might establish new legal foundations balancing the ambitions of major companies with the rights of the public and creators.
