Expert Predicts Approval of Netflix-WB Deal with Trump’s Support

A recent analysis by regulatory expert Andrew Lipman suggests that Netflix’s proposed acquisition of Warner Bros. Discovery (WBD) is likely to be successful. Lipman, a partner at law firm Morgan, Lewis & Bockius, made these remarks during the UBS Global Media and Communications Conference in New York. He believes that the deal, valued at approximately $82.7 billion, will face no significant hurdles.

Details of the Netflix-WBD Deal

Netflix’s acquisition plan for WBD includes its studios and streaming division, and the proposal has already received approval from the WBD board. This announcement marks a pivotal moment in the ongoing competition between Netflix and Paramount. Recently, Paramount made headlines by launching its own $108 billion hostile takeover bid for WBD, arguing that the Netflix deal poses unfair challenges in the market.

Regulatory Concerns

Concerns about regulatory approval have been central to both companies’ strategies. Paramount claims that allowing Netflix to expand its streaming services would unfairly strengthen its competitive position. However, Lipman disagrees, emphasizing that the streaming market is dynamic and includes various competitors beyond traditional platforms. He points out that consumers typically subscribe to multiple services, making it easier to switch between options.

Implications of Potential Presidential Influence

Former President Donald Trump’s potential involvement in the regulatory process raises questions about the approval of the deal. Although Trump has indicated he plans to participate, he is not known to favor either company. Lipman notes that Trump’s administration under Gail Slater, head of the antitrust division, approaches mergers with a rigorous review process.

• Trump approved Nippon Steel’s acquisition of U.S. Steel last year despite opposition.
• Slater has assessed numerous deals, suggesting a willingness to negotiate settlements.
• Netflix has included a $5.8 billion breakup fee in its proposal, indicating room for negotiation.

Future Considerations for the Deal

While the exact conditions of any potential approval remain uncertain, Lipman anticipates that behavioral conditions will likely be imposed on Netflix. These may include:

• Restrictions or agreements regarding movie theater scheduling.
• Licensing provisions to ensure fair access to programming.
• Considerations for non-American content to address cultural concerns.

Lipman also mentioned the growing role of Artificial Intelligence (AI) in regulatory considerations, indicating that AI will be a significant factor in evaluating future markets. This underscores the evolving landscape of regulatory review as companies like Netflix seek to broaden their influence in the entertainment sector.

As the situation develops, both the Netflix-WBD acquisition and Paramount’s counteroffer will continue to shape the competitive dynamics within the media industry.