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In what seems poised to become one of the most dramatic battles in entertainment history, Warner Bros Discovery, Netflix, and Paramount find themselves embroiled in a heated bidding war. While much of the conversation so far has centred around the corporate politics of Hollywood boardrooms, less has been said about the complex legal dynamics shaping the dispute. In this context, it seems pertinent to trace each party’s claims through the lens of the law, particularly as they relate to key issues of antitrust and competition.

The Strategic Stakes

Driving the conflict is Netflix’s proposed acquisition of Warner Bro’s film and television studio assets, including HBO and the HBO Max streaming service. In early December, Netflix announced an agreement with Warner Bros Discovery for a cash-and-stock transaction valued at around $82.7 billion. According to the board of WBD, this represents the best value for shareholders and a clearer regulatory path than competing offers.

Shortly after this deal was announced, Paramount Skydance launched a rival hostile takeover bid – a $108.4 billion all-cash offer for the entire Warner Bros Discovery company, including networks like CNN, insisting it would deliver superior value to shareholders.

As of yesterday, WBD’s board has rejected Paramount’s hostile bid, urging shareholders instead to support the Netflix transaction. The board cited significant financing risks, opaque funding structures, and regulatory uncertainty in Paramount’s proposal, which relied in part on major commitments from private trusts and sovereign funds.

Regulatory Risk

All disputes of this nature exist within an elaborate regulatory context. In this specific instance, antitrust experts argue that any prospective bid from Netflix or Paramount will face intense scrutiny from competition regulators both in the United States and in other jurisdictions.

Already, Paramount has branded Netflix’s potential acquisition of Warner Bros anticompetitive, arguing that it’s harmful to consumers and Hollywood talent. Netflix is by far the largest paid video streamer, and the addition of WBD’s studio assets, including HBO and the Warner Bros. Library, would only serve to widen that disparity.

Whether or not that disparity is significant enough to embolden antitrust laws is contingent on how the market is defined. Does Netflix compete with paid streaming services only, a market where it dominates? Or does the market include free streaming services as well as the cable networks it left for dead, and the social video services it finds itself increasingly at odds with as well?

For Netflix, the market can be defined by considering total US TV viewing time. In this context, they are confident that any acquisition is congruent with regulatory guidelines.

“Even after combining with Warner Bros, our view share would only move from 8% to 9% in the US – still well behind YouTube (13%) and a potential Paramount/WBD combination (14%) wrote Netflix’s co-CEOs in a letter, pinned to its employees.

However, from the view of antitrust regulators, that would be a rather optimistic characterisation. Based on form, regulators are likely to define the relevant market narrowly, with the FTC and DOJ consistently treating paid streaming as a discrete competitive arena, separate from linear television, theatrical distribution, or social video platforms.

Even though Paramount’s share is less than Netflix’s, any deal they strike with WBD will compete with a similar regulatory tension. In Paramount’s case, it is particularly pertinent that the proposed transaction is for the entirety of WBD, including its Global Networks segment, which includes CNN and other cable assets. Tenure over both CBS News and CNN would give Paramount significant control over traditional media, though it is possible that courts may also include newer outlets such as X and Substack when defining the overall market and not just legacy media. Meanwhile, Netflix is seeking only to acquire the studio and streaming divisions, leaving behind its struggling cable holdings.

In any instance, all dealings will be subject to the operation of America’s antitrust legislation. This includes a collection of mostly federal laws that govern the conduct and organisation of businesses to promote economic competition and prevent unjustified monopolies. The three main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. Together, they prohibit a wide range of anti-competitive conduct, including price fixing, cartel conduct, monopolisation, and mergers and acquisitions that may substantially lessen competition.

The enforcement of these laws is facilitated at both a civil and criminal level by agencies such as the Federal Trade Commission, the Antitrust Division of the US Department of Justice and the Justice Department’s Antitrust Division.

Despite Netflix and Paramount originating primarily from the United States, any proposed acquisition is likely to attract the scrutiny of Australia’s competition watchdogs as well, given the impact it will have on global and local entertainment industries. Like the United States, it has its own framework to prevent anti-competitive practices. The Competition and Consumer Act 2010 aims to boost consumer welfare by fostering fair competition and trading and by banning anti-competitive conduct. Its provisions are enforced by the ACCC, which is mandated to scrutinise all mergers and deals with the potential to impact competition materially and consumers in Australia.

In recent years, the ACCC has been increasingly vigilant regarding streaming and media mergers, given the small number of players and the importance of maintaining a diverse selection of content for Australian consumers. An acquisition combining Netflix or Paramount with Warner Bros content could trigger an ACCC review focusing on potential harms such as reduced competition, higher prices, or diminished local content production. In addition to traditional horizontal competition issues, a possible review may also consider the growing role of studios, streaming platforms, and content libraries as platform ecosystems. This conceptual shift has already coloured the enforcement of digital markets, both domestically and abroad.

Historically, the ACCC has taken a robust stance in evaluating media consolidation where consumers’ access to diverse content and news sources is at stake — seen, for example, in its scrutiny of regional newspaper transactions and digital platform agreements. Any dealings between WBD and Netflix or Paramount may trigger similar concerns, particularly regarding content diversity and influence over news and cultural content across multiple jurisdictions. In addition to traditional horizontal competition issues, a potential review may also consider the growing role of studios, streaming platforms, and content libraries as platform ecosystems. This conceptual shift has already coloured the enforcement of digital markets, both domestically and abroad.

A Broder Trend

Outside of the US, the tension around WBD’s acquisition reflects a global shift in how media and tech mergers are regulated. Already, jurisdictions around the world are beginning to pivot the focus of their legislative frameworks so that they safeguard democratic discourse and public interest as much as they do economic competition. For example, media mergers in the EU are now subject to stricter scrutiny under the new European Media Freedom Act (EMFA). Introduced last year, its provisions carve out measures for a “media plurality” test for all mergers. This test assesses mergers based on influence over public opinion, content diversity, editorial independence, and access to varied voices, covering all media types, including print, online, TV and podcasts. In the UK, similar measures are being developed to ensure that plurality and independence can still thrive in a shifting digital landscape. Not only do the reforms expand the scope of the media merger regime, but they also introduce stricter rules on foreign influence and place greater emphasis on public interest.

In this sense, the dealings of Paramount and Netflix become even more interesting, particularly as they navigate regulatory responses and potential court challenges. What happens as any potential acquisition comes to fruition may well influence how complex, multi-billion-dollar mergers are regulated and litigated in Australia and around the world for years to come.