Netflix walked into a buzzsaw on Tuesday. The streaming giant’s co-CEO Ted Sarandos faced a bipartisan firing squad of senators who weren’t buying what he was selling about the proposed $82 billion Warner Bros Discovery acquisition.
The hearing showed just how nervous Washington has become about concentration in the entertainment industry. Both Democrats and Republicans came armed with concerns about reduced competition, potential subscription price hikes, and the fate of movie theaters if this deal actually goes through.
The Theater Question Nobody Asked For
Sarandos tried to play nice with the theatrical exhibition crowd, promising a 45-day theatrical window for Warner Bros films. That’s the current industry standard, sure, but let’s be real here. Netflix built its entire empire by destroying the theatrical window model. Now they’re suddenly committed to preserving it? The senators weren’t exactly convinced.
The irony is thick. Netflix spent years arguing that theatrical releases were dinosaurs, only to now pledge allegiance to cinemas when it serves their regulatory interests. It’s classic corporate maneuvering, the kind that makes people roll their eyes during these hearings.
Republican Senator Mike Lee raised a point that actually matters for regular people working in the industry. When you merge two massive employers in the same market, workers lose leverage. That’s just basic economics. Fewer buyers of labor means less competition for talent, which eventually means suppressed wages and worse working conditions.
YouTube as a Competitor? Really?
The most eyebrow-raising moment came when Sarandos argued that YouTube should be considered a major Netflix competitor. “YouTube is not just cat videos anymore. YouTube is TV,” he claimed, clearly trying to make the merger seem less monopolistic by expanding the definition of who they compete against.
This argument feels desperate. Yes, people watch YouTube. Yes, it consumes time that might otherwise go to Netflix. But comparing curated, high-budget streaming content to user-generated YouTube videos is like comparing a restaurant to a potluck dinner. They’re not the same business model, and the senators seemed to recognize that.
Senator Lee wasn’t having it, and honestly, good for him. This kind of market redefinition is exactly how companies try to slip massive consolidation past regulators.
The Paramount Problem
Meanwhile, David Ellison’s Paramount is still lurking in the background with a competing $108 billion offer. Ellison notably skipped the hearing, which Senator Cory Booker called “frustrating.” You can understand the strategic calculation there. Why show up to get grilled when Netflix is already taking the heat?
But Booker made a point that cuts through all the corporate positioning. Either deal would concentrate enormous power over what Americans watch, hear, and consume as news. That’s the real issue here, not whether Netflix promises to be nice to movie theaters or whether YouTube counts as competition.
The Justice Department now has to decide whether to approve or block this merger. They’ve been more aggressive on antitrust under recent administrations, but that could change depending on political winds. The hearing showed there’s genuine concern on both sides of the aisle, though some Republicans couldn’t resist pivoting to culture war complaints about “woke” content.
Netflix sweetened its bid by moving to all-cash financing, clearly trying to make the deal more palatable. But money isn’t really the issue here. The question is whether one company should control this much of how Americans consume entertainment, and whether promises made in Senate hearings actually mean anything once the deal closes.
