The news: Netflix struggled on Tuesday to persuade a bipartisan Senate antitrust subcommittee that its proposed $82.7 billion acquisition of Warner Bros. Discovery would benefit consumers, workers, and the entertainment industry.
- Lawmakers raised concerns about reduced competition, higher subscription prices, and the long-term impact on movie theaters if Netflix gains control of Warner Bros.’ film and TV studios and HBO Max.
- Netflix co-CEO Ted Sarandos argued the deal would lower consumer costs by reducing overlapping subscriptions, noting that roughly 80% of HBO Max subscribers also pay for Netflix; he also argued that YouTube is a direct competitor for viewers, content, and ad dollars, but some senators rejected the comparison.
- Republican Senator Mike Lee countered that merging two major employers could weaken labor competition and hurt entertainment workers.
- Paramount Skydance’s competing $108 billion bid loomed over the hearing, though CEO David Ellison did not testify, drawing frustration from lawmakers.
What our forecast says: EMARKETER modeling shows total US CTV ad spending in 2027 would change by less than $120 million regardless of the deal’s outcome, landing at approximately $42.2 billion.
- Bundling emerged as the key issue: If Netflix acquires WBD and launches a combined Netflix–HBO Max offering in 2027, Netflix’s US CTV ad growth would rise to about 29%, versus roughly 20% without the deal.
- HBO Max faces the largest swing, with a 32.4% difference in 2027 ad growth depending on the outcome, equating to nearly $200 million in annual ad revenues.
- Paramount+ ad revenues would grow 19.7% if it were to acquire WBD, though advertisers could benefit.