The U.S. Justice Department is scrutinizing Netflix's competitive practices as part of its review of the streaming service's planned purchase of Warner Discovery's studios and the HBO Max streaming platform.
According to a civil subpoena reported to have been reviewed by The Wall Street Journal, the department has requested information from another entertainment company concerning how Netflix competes with rivals. The subpoena specifically asks for documentation of "any other exclusionary conduct on the part of Netflix that would reasonably appear capable of entrenching market or monopoly power."
Regulators' inquiries come as Netflix moves forward with a transaction it agreed to in December. Under the terms disclosed by the companies, Netflix would buy Warner assets for $27.75 a share in cash, placing the value of the deal at roughly $72 billion. The Justice Department has signaled it is examining whether elements of Netflix's behavior, in the context of the acquisition, could strengthen its position in the market or otherwise lessen competition.
The agency's review is not limited to this deal. The Justice Department is also assessing a proposed acquisition involving Paramount, a separate transaction that, according to the companies involved, Warner has recommended shareholders reject. U.S. antitrust law provides regulators with broad authority to challenge or block mergers and acquisitions that may give rise to monopolistic conditions in a market.
What is clear from the subpoena language is that investigators are seeking records and information that could show conduct beyond the terms of the merger itself. The requested materials appear aimed at establishing whether Netflix's tactics - separate from the acquisition agreement - could contribute to an anti-competitive consolidation of market power.
The inquiry underscores the regulatory scrutiny facing large-scale consolidation in the entertainment and streaming sectors. At this stage, the Justice Department's requests for information are part of a review process; the presence of the subpoena signals heightened interest but does not by itself determine the outcome of the agencies' assessment under antitrust law.
Pending the outcome of these regulatory reviews, the companies involved and markets that track media and streaming competition will be watching for any formal actions or rulings. The legal framework cited by regulators grants them the ability to block transactions judged likely to produce monopolistic effects, but any further steps would depend on the evidence gathered in the inquiry.