What Paramount and Netflix’s Turmoil Reveals About Competition Law
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 Bros’ 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 the date of publication, WBD’s board had 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 to 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 and the Antitrust Division of the US Department of Justice.
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, Australia 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 materially impact competition 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.
A broader 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.
Update: how the deal resolved (June 2026)
Since this article was first published in December 2025, the competition for Warner Bros Discovery has reached a decisive, if unexpected, conclusion, and the regulatory questions it raises have only grown sharper.
In January 2026, Netflix amended its agreement with WBD to an all-cash transaction, simplifying the structure and accelerating the path to a shareholder vote. WBD’s board continued to recommend the Netflix deal. However, Paramount Skydance returned in February 2026 with a revised bid of $31 per share in cash for the entire company, valuing the transaction at approximately $81 billion, or around $111 billion including debt. On 26 February 2026, Netflix confirmed it would not match Paramount’s higher offer, effectively withdrawing from the race. WBD shareholders approved Paramount’s acquisition in April 2026.
The deal now awaits regulatory approval in the US and other jurisdictions, including review by competition authorities examining how combining two major studios and several cable networks could affect competition in film production, television distribution, and streaming. The ACCC may also scrutinise the transaction’s impact on Australian consumers and local content.
In a twist that illustrates the unpredictability of large-scale M&A, the company that the WBD board repeatedly characterised as offering inferior value ultimately prevailed. The regulatory analysis in the body of this article remains relevant, with Paramount/WBD now the entity facing the scrutiny we originally attributed to Netflix/WBD. The market definition question, the media plurality concerns, and the ACCC’s likely interest all apply with equal force to the deal as it now stands. For context on how Australian courts have recently approached competition law in digital markets, see our analysis of the Epic Games v Apple and Google Federal Court decision.
If your business is involved in a merger, acquisition, or competition law dispute and you want to understand the regulatory implications, our litigation and dispute resolution team can advise. Contact Koffels for a confidential discussion.
Helpful legal framing
What is antitrust or competition law, and how does it apply to mergers?
Competition law, known as antitrust law in the United States, is the body of law that regulates the conduct and structure of businesses to protect competitive markets. In the context of mergers and acquisitions, competition regulators assess whether a proposed transaction would substantially lessen competition, for example by creating a dominant player with the power to raise prices, reduce output, or foreclose rivals. In Australia, this is governed by the Competition and Consumer Act 2010 (Cth) and enforced by the ACCC. In the United States, the relevant statutes include the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914, enforced by the FTC and the DOJ’s Antitrust Division.
What is market definition, and why does it matter in competition cases?
Market definition is the process by which regulators and courts identify the boundaries of the competitive space in which a merger or conduct is assessed. It matters enormously because a company may appear dominant in a narrow market but unremarkable in a broader one. In the Netflix/WBD situation, Netflix argued its market share was modest when measured against total US TV viewing time, while regulators were likely to define the relevant market more narrowly, focusing on paid streaming services. How the market is defined typically determines whether a merger clears regulatory review or faces challenges.
What is a hostile takeover bid?
A hostile takeover bid is an attempt by one company to acquire another without the support or agreement of the target company’s board of directors. The acquiring company typically approaches shareholders directly, bypassing the board, with a cash or share offer. The target board may recommend shareholders reject the bid while pursuing an alternative transaction it considers superior. In the WBD situation, Paramount Skydance launched a hostile bid directly to WBD shareholders after the board had already recommended the Netflix transaction. The WBD board repeatedly urged shareholders to reject Paramount’s offer before ultimately reversing its position when Paramount’s revised bid was judged to offer superior value.
Does Australian competition law apply to overseas mergers?
Yes, in certain circumstances. The ACCC can scrutinise overseas mergers that have a material effect on competition in Australian markets. For media and entertainment mergers of this scale, the impact on Australian consumers’ access to content, pricing, and content diversity is likely to be a relevant consideration. The ACCC has signalled that it is closely monitoring the WBD acquisition. This principle, that domestic competition law can reach conduct and transactions with effects in Australia regardless of where the parties are based, is consistent with how competition authorities around the world approach global M&A. See also our article on how the Epic Games litigation confirmed Australian courts can hear competition claims against global digital platforms.
What is media plurality, and why is it relevant to entertainment mergers?
Media plurality refers to the existence of a diverse range of independent media voices and news and content sources available to the public. Regulators and governments treat plurality as a public interest consideration separate from pure economic competition, because concentrated ownership of news and entertainment can influence public opinion, reduce editorial independence, and limit the range of perspectives available to audiences. The EU’s European Media Freedom Act now requires a media plurality test for mergers, assessing influence over public opinion, content diversity, and editorial independence. Similar reforms are underway in the UK. In Australia, the ACCC has historically considered content diversity and access to varied news sources when reviewing media consolidation, and these concerns are directly relevant to any deal combining major studio assets, cable news networks, and streaming platforms.
What should Australian businesses involved in a merger or acquisition do to manage competition law risk?
Any merger or acquisition that has the potential to affect competition in Australian markets should be assessed under the Competition and Consumer Act 2010 (Cth) before completion. Depending on the size and nature of the transaction, voluntary or mandatory notification to the ACCC may be required or advisable. Early legal advice is important, as competition regulators can require undertakings, impose conditions, or seek to block transactions that substantially lessen competition. Our litigation and dispute resolution team and corporate and commercial law team can advise on competition law compliance and regulatory risk. Contact us for a confidential discussion.
