‘Netflix continues to push sexual and gender theory on kids,’ Sen. Eric Schmitt stated.
While Congress may have little say in whether Netflix’s proposed merger with Warner Bros. goes through, senators expressed serious reservations about the combination, a possible sign of what’s in store from federal regulators.
At a Feb. 3 hearing of the Senate Judiciary Committee, lawmakers from both parties expressed numerous concerns to Netflix CEO Ted Sarandos and Warner Bros. Chief Strategy Officer Bruce Campbell regarding the merger, including fewer entertainment jobs, higher prices for streaming services, and harm to America’s movie theaters.
In addition, conservative lawmakers objected to Netflix expanding its control over the media landscape, charging that the company has a left-wing bias in its content and targets children with inappropriately sexualized content.
The decision whether or not to approve the merger rests with the Justice Department, the Federal Trade Commission, and potentially state attorneys general and the European Commission. However, many of the issues that senators raised are likely to also be key factors in the decisions made by these agencies.
Netflix leads the market for the streaming of movies and television shows. Warner Bros. is a storied and profitable movie and television studio, with an extensive media library that would add exponentially to Netflix’s online offering. Warner’s properties include HBO, Discovery, and DC Comics, as well as the Game of Thrones, The Lord of the Rings, and Harry Potter franchises.
The combination of Netflix and Warner Bros. would create a Hollywood heavyweight that could dominate both entertainment production and distribution. However, when it comes to assessing whether a merger violates antitrust laws, the market share of a post-merger company depends on what regulators say the market is.
“How you define the market in which the merged entity would make its appearance makes a big difference,” Sen. Mike Lee (R-Utah) told those at the hearing. “In a subscription video-on-demand market, if it were defined in that way, the combined firm would likely exceed the 30 percent market share threshold, thus triggering a presumption of illegality established by the Supreme Court and long-standing precedent.”
Taking a broader view of the market, Sarandos responded that Netflix currently produces only about 9 percent of U.S. entertainment content and that its share would increase to 10 percent with the merger. Regarding the streaming market, he said that Netflix currently controls 18 percent of that market, which would increase to 21 percent with the merger.
