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Netflix’s (NFLX) $72 billion agreement to acquire Warner Bros.’ (WBD) studio and streaming assets has set off a high-stakes debate about whether regulators will allow the world’s largest streamer to get even bigger.
The deal, which folds Warner Bros.’ film and TV studios, HBO, and HBO Max into Netflix’s global machine, immediately resets the competitive landscape. And it caught even seasoned Wall Street analysts off guard.
Citi analyst Jason Bazinet admitted this scenario barely made his list of possibilities.
“It was my lowest-probability outcome,” he told Yahoo Finance on Friday. “Actually, we only had a 5% likelihood that this transaction would be consummated.”
His framework assumed consolidation among the three subscale streaming apps — HBO Max, Paramount+ (PSKY), and Peacock (CMCSA) — rather than the category leader using its balance sheet to absorb a major rival.
“We just put very low probability on the industry leader essentially getting bigger,” he said. “But that’s what this transaction says.”
That unexpected outcome is now colliding with the political environment.
According to data from JustWatch, a platform that measures streaming engagement across US services, a combined Netflix–WBD would control roughly a third of US streaming activity. That’s a level of concentration that has already drawn fierce criticism.
Sen. Elizabeth Warren (D-Mass.) blasted the deal, writing in a statement shared with Yahoo Finance, “This deal looks like an anti-monopoly nightmare … threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk.”
She urged the Department of Justice to conduct a fair review without “influence-peddling and bribery.”
Netflix, for its part, is expected to counter that regulators shouldn’t define the market as narrowly as subscription streaming alone, especially as Americans now consume entertainment across a much wider universe — from YouTube (GOOGL) and ad-supported streaming to gaming and social video.
The company is likely to lean heavily on this argument, asserting that adding Warner Bros.’ studios and HBO does not give it outsized market power but instead helps it compete in a far more fragmented entertainment landscape.
“We’re highly confident in the regulatory process. This deal is pro-consumer, pro-innovation, pro-worker, it’s pro-creator, it’s pro-growth,” Netflix co-CEO Ted Sarandos said in comments following the deal announcement.
Bazinet also highlighted another piece of Netflix’s regulatory strategy: “They’re going to operate those two DTC apps sort of separately,” he said, suggesting the company will try to frame the deal as preserving consumer choice — and potentially even enabling discounted bundles across Netflix and HBO Max.
