By JohnM.Yun
About the author: John M. Yun is a professor of law at the Antonin Scalia Law School of George Mason University.
Warner Bros. Discovery announced on Friday that it intends to sell its major assets to Netflix. If the $72 billion cash-and-stocks transaction goes through, Netflix will gain control of Warner Bros. Pictures, DC Studios, HBO Max, and more.
It is far from a done deal, however. Paramount Skydance presented a $77.9 billion counteroffer Monday. And many, including the president, have raised antitrust concerns around Netflix. That may represent a significant hurdle for the parties before regulators.
We can start where most antitrust cases start: market share. By U.S. subscribers, Netflix leads with roughly 82 million households, or 18%, of the streaming market. HBO Max, for comparison, accounts for 13%. But subscriber counts are likely an imperfect proxy for market power: Users vary dramatically in how often they watch each service. Intensity of use matters because it likely correlates with subscriber price sensitivity.
Complicating things further, U.S. households typically subscribe to about three streaming services. This "multi-homing" may reflect the presence of substitutes, or it may simply indicate that services are complementary -- the way the sports programming on ESPN+ supplements, rather than replaces, Netflix's more general offerings.
If subscriber numbers are an unreliable indicator of market share, what is the right metric? In this case, it may be share of total hours watched.
A federal-district court embraced this approach in FTC v. Meta last month. It identified time spent as "the best single measure" of market share, when the market at hand is social media. By that metric, Netflix commands about 20% of streaming hours and HBO Max 15%. Combined, they exceed 30%.
That matters because of a 1963 Supreme Court precedent, U.S. v. Philadelphia National Bank, which said that mergers between rivals that create a firm with more than a 30% market share are presumptively illegal under the Clayton Act, Section 7. If the relevant market is defined as streaming services, then a Netflix-HBO Max combination sits squarely in the danger zone.
Netflix will almost certainly argue that the relevant market is broader than streaming alone. The company will push regulators to include cable TV, satellite TV, live TV streaming bundles, and potentially online video platforms like YouTube and TikTok within its boundaries of the market at hand. Whether those platforms belong in the market will depend on evidence that shows consumer attention is genuinely interchangeable across them. If attention is fungible, then Netflix's share, and the merged firm's share, would fall below the presumption established in the 1963 precedent.
That WBD and Netflix overlap in content production will also draw scrutiny. Netflix produces almost exclusively for itself, while Warner Bros. sells its content to theaters, cable channels, and rival streamers. Regulators will ask whether the merged entity would withhold WBD. programming from competitors or raise the asking price for their programming considerably.
Efficiencies will also matter. Would Netflix maintain HBO Max as a stand-alone service, bundle it, or integrate it? Would combining user data improve recommendations? Would merging WBD and Netflix's production operations reduce costs or spur innovation?
Regulators may also have to consider the other serious bidder, Paramount. A Paramount-WBD merger would also involve streaming and studio production overlaps. But, at an estimated 22% share of streaming hours -- which is below the U.S. v PNB threshold -- the government's burden to demonstrate harm would be much higher.
The Netflix case falls neatly into a broader debate about whether traditional antitrust tools are adequate for a digital ecosystem where content creation, distribution, and data converge. But, without existing alternatives, the likely outcome is that regulators will fall back on conventional tests.
However modern the industry, the antitrust evaluation of the combination of Netflix and WBD will ultimately hinge on familiar questions: how to define the market, measure shares, and assess competitive harm under the longstanding logic of court precedents.
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December 08, 2025 16:20 ET (21:20 GMT)
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