Netflix and Warner Bros. Discovery: EU Antitrust Experts Predict a Smooth Road Ahead for $83B Deal with Possible Conditions

Netflix’s major deal to acquire Warner Bros. Discovery (WBD), valued at $83 billion, is unlikely to face significant hurdles from regulators in the European Union, according to antitrust experts.

The confirmed acquisition, announced on Friday, is set to fundamentally alter the entertainment landscape by uniting a portfolio that includes blockbuster franchises like Stranger Things and Harry Potter.

Cristina Caffarra, a competition economist who has advised firms such as Apple and Amazon on European antitrust issues, noted, “The EU never stops these deals. They always do access remedies. I’m not saying it will sail through, [but the process will be] sabre rattling, remedy, clear.”

Nicolas Petit, a professor of competition law at the European University Institute, echoed this sentiment, stating, “The European Commission rarely fights these kinds of mergers.”

The geopolitical implications of blocking the merger could also influence regulators’ decisions. Petit explained that prohibiting a merger between two U.S. companies amidst ongoing trade tensions would be complex, particularly given support for the acquisition from influential figures like Larry and David Ellison.

Historical precedents further suggest smooth regulatory pathways. For instance, Skydance’s merger with Paramount passed with little opposition, while the most recent significant rejection was the 2023 acquisition of Etraveli by Booking.com, which is currently under appeal.

Investigation & Remedies

The European Commission is expected to launch an investigation into the takeover due to thresholds requiring notification when a firm’s combined global revenue exceeds €5 billion ($5.8 billion) or its European sales surpass €250 million—marks that both Netflix and WBD will exceed.

Caffarra anticipates that a “Phase II” investigation will be initiated, which includes a deeper review of Netflix’s plans for WBD and typically lasts at least 90 days.

The focus may shift from blocking the deal to determining the necessary remedies. Experts suggest that Netflix might need to uphold existing film and TV licensing agreements to avoid monopolizing content.

Peter Alexiadis, a visiting scholar at Kedge Business School in Paris, cautioned that framing suitable remedies could be the most challenging aspect of the merger review, particularly regarding Netflix’s use of its vast library of content for AI training in recommendation systems.

Guy Bisson, executive director of Ampere Analysis, added that key concessions might be required for EU approval. “I don’t think Warner studio operations plus Netflix is particularly problematic, but Netflix plus Max may be the sticking point, a problem that should be solvable by potentially selling that operation off,” he explained.

The situation draws parallels to Disney’s 2018 acquisition of Fox, which involved divesting interests in factual channels to achieve European Commission approval.

Despite potential challenges, Netflix remains optimistic about navigating regulatory scrutiny. On a recent call, co-CEO Ted Sarandos stated, “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.”

A spokesperson for the European Commission remarked, “This transaction has not been formally notified to the Commission. If a transaction constitutes a concentration and has an EU dimension, it is always up to the companies to notify it to the Commission.”