The US Department of Justice is digging deeper into Netflix’s proposed 72 billion dollar takeover of Warner Bros. Discovery, and this is no longer just a routine merger review.
According to a civil investigative demand reviewed by Bloomberg, the DOJ is examining whether the deal could substantially lessen competition or create a monopoly under both the Clayton Act and the Sherman Act. That combination is significant and signals broader scrutiny than a standard merger check.
What the DOJ is examining
The investigation is looking beyond the size of the deal itself. Officials are asking whether Netflix already holds anticompetitive leverage over independent content creators and whether the acquisition would strengthen that position.
Specifically, the DOJ is probing:
• Whether the merger may reduce competition in violation of Section 7 of the Clayton Act
• Whether it could create or reinforce monopoly power under Section 2 of the Sherman Act
• Whether Netflix uses its scale to gain leverage in negotiations with independent studios and filmmakers
The civil investigative demand was reportedly sent to an independent movie studio, indicating regulators are collecting views from market participants, not just the merging companies.
Why the Sherman Act matters here
Most merger reviews rely on the Clayton Act alone, which is tailored for evaluating acquisitions.
Bringing in the Sherman Act changes the tone. That law is typically used in monopolization cases against single companies such as Alphabet’s Google, Live Nation Entertainment, or Visa.
The inclusion of both statutes suggests the DOJ is not only reviewing the transaction but also examining Netflix’s broader business practices.
Netflix’s position
Netflix has pushed back strongly.
Chief Legal Officer David Hyman said the company operates in an extremely competitive market and does not hold monopoly power or engage in exclusionary conduct. Netflix says it will cooperate fully with regulators.
Its legal team has also indicated that they have not received notice of a formal monopolization investigation.
Market realities
Netflix is the largest paid streaming service globally and one of the biggest buyers of film and television programming.
Some important context:
• Netflix is spending around 20 billion dollars on programming this year
• Its content includes both original productions and licensed shows
• Many of its biggest hits are produced by third party studios
• It accounts for about 9 percent of total US TV viewing
By acquiring Warner Bros. Discovery, Netflix would gain control of HBO, Warner Bros. studios, and a major direct streaming competitor. That vertical and horizontal combination is likely central to the DOJ’s concerns.
At the same time, Netflix’s programming spend is comparable to peers such as Disney and Comcast, and its overall TV share remains well below traditional monopoly thresholds.
What this means for the deal timeline
The broad scope of the review suggests the process could stretch for months. That delay may benefit rival bidder Paramount Skydance, which has argued that Netflix’s offer faces serious regulatory risk.
Paramount has said its own tender offer has cleared the DOJ’s second request review, though it could still face scrutiny in Europe and from US state attorneys general.
Warner Bros. has also reopened talks with Paramount, setting a February 23 deadline for a best and final offer.
Bigger questions for the community
This review raises more than just merger math.
• Does Netflix’s scale as the largest streaming buyer give it outsized influence over independent filmmakers
• Would owning both distribution and a major studio tilt negotiations further in its favor
• Or is this simply the government applying tougher scrutiny to large tech media platforms
The DOJ’s approach signals that regulators are willing to test both merger law and monopoly law in high profile media transactions.
Whether the investigation ends in a lawsuit or a green light, this is shaping up to be a defining moment for how streaming power is regulated in the United States.