The Trump administration's approval has emerged as a key variable in Netflix's acquisition of Warner Bros. Discovery. Market attention is focused on the deal as Netflix could face substantial debt and penalty payments if the acquisition falls through.
The U.S. Department of Justice has begun reviewing the impact of Netflix's Warner Bros. acquisition on streaming market dominance, the Wall Street Journal reported Monday (local time). Citing a senior White House official, WSJ reported that "President Trump's aides have expressed concerns about this acquisition."
Industry observers have raised concerns about potential antitrust violations even before the merger announcement. Combining Netflix with Warner Bros.' streaming service HBO Max would give the merged entity approximately 30% of the U.S. subscription streaming market. Under Justice Department guidelines, a direct merger between competitors is considered illegal if the combined company's market share exceeds 30%.
However, Netflix maintains that the acquisition poses no problems, arguing that free video platforms such as YouTube and TikTok should also be included in the streaming market definition.
Paramount, which had competed with Netflix for the acquisition, has notable ties to President Trump. The president is close friends with Paramount CEO David Ellison and his father Larry Ellison, founder of Oracle. With Paramount already protesting the deal as a "sweetheart acquisition," observers speculate that President Trump could pressure antitrust authorities to block Netflix's acquisition attempt.
Meanwhile, Netflix is accelerating its acquisition efforts, securing $59 billion of the total $72 billion acquisition price as bridge loans from Wall Street banks including Wells Fargo. Bloomberg noted this represents the largest amount ever raised through bridge financing. Netflix has also reportedly committed to paying Warner Bros. a penalty of approximately 8 trillion won if the deal falls through.
Concerns over debt and penalty payments drove Netflix shares down approximately 3% on the New York Stock Exchange on Wednesday.
