Netflix Faces Major Problem After Announcement

On Friday, Netflix made a massive announcement as the streaming giant announced that it was moving forward with acquiring Warner Bros. Discovery, Inc. in a deal that included both HBO Max and HBO. While it's obviously a major move in the entertainment space, it sounds like Netflix now faces a pretty significant hurdle.

While the acquisition obviously has major ramifications for consumers, it has become clear in the days following the announcement that the deal will face some pretty significant challenges, perhaps even coming from the president himself.

Netflix Announces Deal

Netflix officially announced the groundbreaking acquisition on Friday in a press release.

“Today, Netflix, Inc. (the Company) and Warner Bros. Discovery, Inc. (WBD) announced they have entered into a definitive agreement under which Netflix will acquire Warner Bros., including its film and television studios, HBO Max and HBO,” the company announced in a press release on Dec. 5.

Netflix’s co-CEOs Greg Peters and Ted Sarandos also issued statements on the deal, expressing optimism about the acquisition.

“This acquisition will improve our offering and accelerate our business for decades to come,” Peters said in the release.

“Our mission has always been to entertain the world,” Sarandos said in the release. “By combining Warner Bros.’ incredible library of shows and movies—from timeless classics like Casablanca and Citizen Kane to modern favorites like Harry Potter and Friends—with our culture-defining titles like Stranger Things, KPop Demon Hunters and Squid Game, we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”

While it's obviously a newsworthy deal, Netflix sent a message to customers, as they made it clear that nothing will change for customers immediately, as there are still quite a few steps before the deal is officially done.

Netflix Faces a Major Problem

While Netflix is obviously excited about the acquisition, the company faces a major problem as the deal is set to be challenged by global antitrust regulators. After announcing the deal, Netflix will now have to prove to global antitrust regulators that the deal won’t give it an illegal advantage in the streaming market, which will be no easy task.

As analysts told Bloomberg this week, Netflix will now face a lengthy Justice Department review and a possible federal lawsuit seeking to block the acquisition due to antitrust concerns.

“Netflix will have an uphill climb unless it agrees to divest HBO Max as well as additional behavioral commitments — particularly on licensing content,” said Bloomberg Intelligence analyst Jennifer Rie.

“The streaming overlap is significant,” she added, saying the argument that “the market should be viewed more broadly is a tough one to win.”

Netflix Already Receiving Pushback

Key political figures on both sides of the aisle have already expressed concern, as well, with Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren already speaking out against the deal.

“This deal looks like an anti-monopoly nightmare,” Warren said after the Netflix announcement.

"A lot of antitrust red flags here. A hearing is almost certain. Stay tuned," Utah Senator Mike Lee, a Republican, said in a social media post earlier this week.

United States President Donald Trump even weighed in on the deal, warning that it "could be a problem."

"Well, that’s got to go through a process, and we’ll see what happens," Trump said of the deal, via Bloomberg. "But it is a big market share. It could be a problem."

Clearly, Netflix has a tall task as it looks to prove that the deal should go through.